Muthoot Finance fair value — is it overvalued?
The fair value of Muthoot Finance (MUTHOOTFIN), built from its filed accounts — ten years of results, the method that fits this business, and what today's price already assumes.
The market expects much less from Muthoot Finance than it has delivered before.
At today’s share price, buyers are assuming Muthoot Finance earns about 18.6% a year on the money invested in it, from here on. Over the last ten years it actually earned about 25.3% a year. That is a big step down from its own record. Either the market can see a problem that the published accounts do not show yet, or it is expecting a slowdown that has not happened.
What the market is assuming
Worked backwards from today's share price: the return on equity today’s price implies for Muthoot Finance, against what the model assumes.
How to read this. The number on the left is the return on equity today’s share price quietly takes for granted. The number on the right is what the model actually assumes. When the two are far apart, that gap is the bet you would be taking.
Ten years, in charts
Revenue and earnings per share in ₹, return on equity and leverage as ratios — all from the filed statements.
The numbers behind them
Revenue and net profit as filed, in ₹ crore.
| Year | Revenue | Net profit | Margin |
|---|---|---|---|
| FY2019 | 7,594 | 2,103 | 27.7% |
| FY2020 | 9,684 | 3,169 | 32.7% |
| FY2021 | 11,531 | 3,819 | 33.1% |
| FY2022 | 12,185 | 4,031 | 33.1% |
| FY2023 | 11,898 | 3,670 | 30.8% |
| FY2024 | 15,062 | 4,468 | 29.7% |
| FY2025 | 20,214 | 5,352 | 26.5% |
| FY2026 | 31,209 | 10,607 | 34.0% |
How this company gets valued — and why
A lender is not valued with a discounted cash flow. Borrowing is the raw material of the business and interest is operating income, so enterprise value means nothing here. It is valued on excess return instead — the profit it earns above the cost of the equity funding it.
Excess return — the correct lens for an NBFCUnderstand this method
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The complete valuation
Unlock the complete valuation report
- ✓Fair value per share — with the full working behind it
- ✓Bull, base and bear cases — and what moves between them
- ✓Every assumption — growth, margins, cost of capital, with sources
- ✓Peer comparison — how rivals are priced on the same measures
- ✓Downloadable PDF report — the full write-up, yours to keep
Frequently asked
Is Muthoot Finance overvalued?
At ₹2,722 the market is pricing in roughly 18.6% sustained ROE, against the ~25.3% its own record supports. That is less than it has delivered — on these numbers the market is asking the business for less than its own record, which usually means it doubts the record repeats.
What is the intrinsic value of Muthoot Finance?
It is computed from the filed financial statements using the method that fits this business (excess return), with every assumption shown alongside the result. The per-share figure and the full working are in the report.
Is Muthoot Finance a good long-term investment?
Revenue went from ₹0.08 lakh crore to ₹0.31 lakh crore over the period shown, while return on equity moved from 30.2% to 31.3%. Growing scale on a rising return is a very different proposition from growing scale on a falling one.
How much debt does Muthoot Finance carry?
Debt to equity stands at 2.93, against 2.63 at the start of the period — the balance sheet is a core input to the cost of capital used here.
How does FairStocks calculate fair value?
From published financial statements. The method is chosen to fit the business — a bank on excess return, a regulated utility on its rate base, a conglomerate by its parts — and every assumption is shown with its source. When the numbers do not support an estimate, no estimate is published. This is an educational research tool: it reports what the model computed and does not recommend buying or selling anything.
What assumptions are used to value Muthoot Finance?
A cost of capital of 12.67%, growth drawn from the company's own record rather than from guidance, and the valuation method that fits the business. All of them are listed in the report, with how much each one moves the answer.