Muthoot Finance share price jumps 3% as board mulls stock-split process

Muthoot Finance share price jumped over 3 per cent to hit a day’s high of Rs 1,143.35 apiece after the company informed that its board of directors will meet on July 18 to consider the proposal for stock split. The stock price is however still 12 per cent away from its 52-week high touched on June 19, this year. With today’s gain in the stock price, market capitalisation of Muthoot Finance stood at Rs 45,515.73 crore, according to BSE. “A meeting of the Board of Directors of Muthoot Finance Limited is scheduled to be held on Saturday, the 18th day of July 2020, to consider and approve the proposal for subdivision/stock split of equity shares of the company, subject to the approval of shareholders,” Muthoot Finance said in a regulatory filing.

The company also informed that it will seek approval of shareholders to increase the borrowing powers of the board of directors of the company from existing Rs 50,000 crores to Rs 75,000 crores. In a stock split process, the company divides its existing shares into multiple shares to boost the liquidity of the shares. Muthoot Finance reported a 59 per cent on-year increase in its standalone net profit for the January-March quarter of the last fiscal at Rs 815 crore. During the quarter under review, gold loan assets increased by Rs 3,113 crore.”Given the uncertain outlook for Muthoot Finance’s subsidiaries and the re-rating in the stock, we maintain ‘neutral’ rating on the stock,” Motilal Oswal Securities said in a research report last month.

At 11 AM, Muthoot Finance shares were trading 1.84 per cent higher at Rs 1,129 apiece as compared to a 0.45 per cent rise in the benchmark S&P BSE Sensex. Edelweiss said that it recognises gold financing as a mature credit category and recommended to buy the stock. “Muthoot’s outlook supported by a gold price tailwind promises accelerated earnings momentum,” it added in the report.