Update: This stock really is Not a Multibagger. Since the Valuation change it is No Longer a Multibagger in our view. You can check other stocks from our latest Multibaggers pack.
https://futurecaps.com/tag/multibagger/
Futurecaps is a SEBI Registered Research Analyst providing Multibagger service to Indian Stock Market.
Muthoot Finance focuses mainly in the gold loan segment. The company also an emerging player in the money transfer, wealth management services.
Website: http://www.muthootfinance.com/
| History of Consistently Increasing Sales, Earnings & Cash Flow | Had 100% growth in every years except 2013-14. (Tremendous growth impacted due to new RBI rules) |  |
| Durable Competitive Advantage | Company faced a hit due to RBI rules. | |
| Future Growth Drivers | Gold Price peaking should bring back the sheen of this stock price. | |
| Conservative Debt (long term debt < 3 Net Profit) | Not. |  |
| Return on Equity must be Above Average | Yes. |  |
| Low CAPEX required to maintain current operations | Yes. | |
| Management is holding / buying the stock | 80% is the promoter holding | |
| Price is Under Valued (< intrinsic value) | Not. | |
| Stock Price is consolidating (now) | Not. | |
| Stock Price is growing in past years along with EPS growth | Not. Company is revolving around the IPO price. | |
Additional Futurecaps Checklist
| PE, PB Ratio | PE at 9 & PB at 1.5 which is good. | |
| Cash Flow Positive, Net Profit % greater than 8% | Cash Flow is Positive, But operating cash flow is negative. Net Profit is just around 8%. | |
| Paying Dividends, Tax | Yes. | |
| EPS Growth Rate | Not. | |
| Expected Gain in 10 Years | |
|
| Power of Brand | Have a good brand. | |
| Corporate Governance, Reputation of Leaders | Yes. | |
| Fraud reported | Not. | |
Warning: This is a gold-price dependent player. Gold Price is trading 30% down from peak. Restoring of Gold Price to the Peak should make this company gain 3X-5X profits.
Declaration
Here by we declare that Muthoot Finance is a multibagger contingent to gold-price peak.
Allocation
2% to 3% of your portfolio.
Disclaimer
Futurecaps recommends 20 to 25 multibaggers per year, we recommend a 25% to 50% allocation of your savings in equity. The stocks recommended here are gone through Analysts of several years experience in stock market. Although they were successful in predicting future multibaggers, the overall stock market is a risky game. So we recommend the reader to put his/her own thoughts & invest wisely.