It may come as a surprise, but one of India’s biggest non-banking financial companies (NBFCs) has more gold in its vaults than many countries.
Muthoot Finance, the country’s largest gold loan provider, currently holds 209 tonnes of gold in its safe deposit boxes. This is three times the gold reserves of Pakistan and higher than the reserves of Brazil, Australia, and South Africa.
Shailendra Bhatnagar, Chief Analyst & Editor – Markets at Business Today Television, explained, “It’s very difficult to imagine, but it’s the absolute truth. 209 tonnes of gold is in the safe deposit boxes of Muthoot Finance. It is three times the gold reserves that Pakistan has. Muthoot Finance has more gold than Brazil, more gold than Australia, and more gold than South Africa.”
GOLD FINANCE STOCKS IN FOCUS
The data has brought fresh attention to gold financiers in the market, especially Muthoot Finance and Manappuram Finance. Both companies have seen strong demand as investors look at gold as a safe asset during times of economic uncertainty.
Silver prices also moved higher, up 1.23% with one kilo of silver valued at Rs 1,43,863, while gold stood at Rs 1,58,666. This has kept investor interest high in companies that provide loans against gold.
MUTHOOT VS MANAPPURAM: EXPERT VIEWS
Market experts believe that while Muthoot Finance continues to be a dominant player, Manappuram Finance may offer more growth potential from current levels.
Sharad Avasthi, Head PCG Research, SMIFS Limited, said, “A typical cycle has played out around three years ago, when no one was willing to look at them. They have played out very nicely with the cycle. Muthoot might be at peak valuation, so leaving very little on the table. But Manappuram, I think, still has a lot of pathway to catch up. The change in management also helps. So I think Manappuram is something I would still want to bet on. Muthoot might be fairly squarely priced, you might get market-linked returns. But Manappuram still has some way to go. We are trading at 2.5 times price-to-book, so that is one stock within the gold finance space that can still evolve from current index.”
FESTIVE SEASON IMPACT
Experts also say that the real impact of festive season demand on these companies will become clear in the next quarter. Gold demand in India usually spikes during festivals like Durga Puja, Navratri, and Diwali.
Sharad added, “While I’m positive on the festive sentiment, maybe this quarter we’ll not see the full impact. Eastern India usually has a bullish time around the Durga Poojas and Navratris, but the full-blown India festival demand will play out pre-Diwali. So I think next quarter probably would actually capture the real sense of how the festive demand is going to look like. This quarter, we’ll only get a glimpse of it.”
(Disclaimer: The views, opinions, recommendations, and suggestions expressed by experts/brokerages in this article are their own and do not reflect the views of the India Today Group. It is advisable to consult a qualified broker or financial advisor before making any actual investment or trading choices.)
