Morgan Stanley has upgraded the stock’s rating to “overweight” from “equal-weight”, keeping the price target unchanged at ₹4,500 per share, implying an upside potential of 34% from its previous close.
The stock has corrected sharply since reporting its third quarter earnings.
Morgan Stanley said the rise in geopolitical uncertainty provides more support and upside risks to forecasts and improves Muthoot’s relative positioning compared to the rest of the group.
The stock is trading at 13 times its estimated financial year 2027 price-to-earnings ratio, 11 times its financial year 2028 price-to-earnings ratio and 2.4 times its estimated financial year 2028 price-to-book ratio for a 24% return on equity (RoE), the Morgan Stanley note said.
Potential risks for the stock include — A sharp and sustained decline in gold prices and higher competitive intensity weight on both, assets under management (AUM) and net interest margin (NIM).
Of the 25 analysts who have coverage on the stock, 14 have a “buy” rating, six have a “hold” rating and five have a “sell” rating.
Shares of Muthoot Finance were up 2.02% at ₹3,421.5 apiece around 10.25 am on Monday. The stock has risen 26.7% in the last six months but has declined 10.9% this year, so far.
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