Sunday, July 5, 2020

Muthoot Capital Services Ltd – Ride the wave of Pre-owned car demand in times of Covid-19


Muthoot Capital Services Ltd closes   at 405.30 with  a  Gain   of   + 4.70    on    03-July- 2020   with formation of  a  Green  Candle    on Daily  Price Chart.
About the Company : Muthoot Capital Services is a Systemically Important Deposit Accepting Non-Banking Financial Company (NBFC) primarily engaged in the business of financing for purchase of automobiles, mainly two wheelers against hypothecation of the vehicles and granting of personal/business loans etc.The Company  has posted Net Sales / Revenue   of 194.90 Cr & Net Profit  of 26.70 Cr in FY2020 and expected to post Net Sales / Revenue   of 185.20 Cr & Net Profit of 22.60  Cr in FY2021 and Net Sales / Revenue   of 218.50 Cr & Net Profit of 33.30 Cr in FY2022 .
Valuations  :  The Company is now Trading at X 0.60   of its Value. We have valued the company with its  expected Financial Year 2020 earnings  , which is now almost  ~40%  Discount  to its value .
The Company has total assets of 2587.20 Cr  and Net Debt of 1905.40 Cr in its books as on 31.03.2020. Return on Equity (RoE) is 12.3%( declined from 18.90% of FY2019); RoA is 2.34%; EPS is 36.8.
Why it is in Focus: The sale of used car has increased to 5Mn units  in 2020 from 3.5 mn in 2014.
“ A study by second-hand car dealer Cars24 showed 22.5 per cent of the consumers, who were planning on buying a new car last year, would prefer used cars now due to limited budget.” ( Media Report )
The Fare Value of Equity Per Share is 802 for FY2021 and 1023 for FY2022 ( based on 10% expected growth )
Disclaimer : We are / may going to take exposure shortly.
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