Now Reading: BofA picks Muthoot, IIFL bonds over Shriram, Manappuram
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BofA picks Muthoot, IIFL bonds over Shriram, Manappuram
Bank of America has retained an 'Overweight' rating on bonds of Muthoot Finance and IIFL Finance, citing strong earnings momentum and attractive spreads. The brokerage has kept Muthoot Finance and IIFL Finance…
Bank of America has retained an 'Overweight' rating on bonds of Muthoot Finance and IIFL Finance, citing strong earnings momentum and attractive spreads. The brokerage has kept Muthoot Finance and IIFL Finance as its top gold-loan NBFC picks for Q1, while passing over Shriram Finance, Manappuram Finance, Piramal Finance, and Sammaan Capital.
BofA noted that gold-loan NBFCs are outperforming diversified lenders in the June quarter. The overweight ratings reflect expectations of continued earnings growth in the gold-loan segment, where loan demand is supported by rising gold prices. The report did not assign specific ratings to the other four NBFCs.
Indian Opinion Analysis
BofA's preference for Muthoot and IIFL over Shriram and Manappuram reflects the market's increasing focus on gold-loan NBFCs. These lenders benefit directly from rising gold prices, which boost collateral values and loan growth, unlike diversified NBFCs such as Shriram Finance. A key differentiator is asset quality: gold-loan portfolios have low credit risk because loans are fully secured, and non-performing assets remain negligible compared to unsecured or vehicle-loan books. Under the RBI's 2014 framework for gold-loan NBFCs, loan-to-value ratios are capped at 75%, capping downside risk. The next performance checkpoint will be the RBI's December 2024 financial stability report, which will disclose sectoral NPA trends and gold-price sensitivity across NBFCs.
Source: ndtvprofit.com
This story was synthesised by AI from the source linked above.
