gold prices: CLSA upbeat on gold loan cos Muthoot, Manappuram

Brokerage CLSA has upgraded its rating on Muthoot Finance to ‘outperform’ and maintained its bullish ‘outperform’ stance for Manappuram Finance as it expects these gold financiers to benefit from the robust momentum in the gold loan segment in FY25 so far, especially given the drags in the personal loan segment. It sees a 10-14% upside in these stocks in the coming twelve months. “Both have gained from the strong momentum and due to restrictions on peers,” said CLSA’s analysts.

The RBI had prohibited IIFL from March to September 2024 from sanctioning, disbursing, or selling any of its gold loans citing certain supervisory concerns.

The report said that despite NPAs (non-performing assets) inching up, healthy appreciation in gold prices gives them comfort on auction and recoveries. Gold prices have extended their gains since the election of Donald Trump as the US President as investors moved to a safer asset.

Gold prices in Mumbai gained almost 38% in the past year. CLSA’s analysts expect both these companies to report “healthy” third quarter results this week.