Muthoot Finance does not see the need to auction gold so quickly, George Alexander Muthoot, managing director (MD), told CNBC-TV18.
Gold loan finance company Muthoot Finance Ltd (MFIN) on Wednesday, June 2, reported a 22 percent jump in standalone profit after tax at Rs 996 crore for the quarter ended March 2021. The company had posted a standalone profit after tax of Rs 815 crore in the year-ago period. For the full year, the standalone net profit rose by 23 percent to Rs 3,722 crore as against Rs 3,018 crore in FY20.
The gold business shines for the company, but the housing finance business is weak for the second straight quarter. The company reported its best asset quality in 17 quarters.
“One should not panic when there is fluctuation in price (gold). If customers want their ornaments back, they will certainly take them. So, there is no need to auction the gold so quickly. We give the loan for the 12-month period, and not for a 3-month period. Accordingly, customers have 12 months to redeem their gold. Therefore, an auction is the last resort,” Muthoot said.
On growth, he believes that the company will be able to achieve a minimum 15 percent asset under management (AUM) growth for the next few years.
“For the next two-three years, we would like to give modest guidance of 15 percent and we are sure that we will be able to do it. However, if Corona is dealt with early on, and if we manage to come out of the pandemic early, then we should see better than 15 percent by the year-end. We will certainly achieve 15 percent this year and the next year,” said Muthoot.
For the entire management interview, watch the video.