Mannapuram Finance, Muthoot Finance gain up to 3% in trade; here's why

Muthoot Finance and Manappuram Finance shares rose up to 3.1 per cent on BSE in Tuesday's trade. The buying sparked after gold hit a two-week high on Monday, supported by China's central bank resuming purchases after a six-month hiatus. 

 

Spot gold gained 1.1 per cent to $2,662.98 per ounce, as of 01:41 PM ET (1841 GMT). US gold futures settled 1 per cent higher at $2,685.50.

 

Around 11:44 AM, Muthoot Finance share price was up 2.95 per cent at Rs 2,049.05 per share and Manappuram Finance shares advanced 1.5 per cent at Rs 172.7 per share on BSE. In comparison, BSE Sensex was up 0.16 per cent at 81,640.65. 

 

Muthoot Finance is leading non-banking financial company (NBFC), primarily known for offering gold loans. Established in 1997 and headquartered in Kerala, the company has become a prominent player in the Indian financial services sector, particularly in rural and semi-urban areas.

 

The company's core business involves providing short-term loans against the pledge of gold jewelry. It offers flexible loan amounts and repayment options, making it a popular choice for individuals seeking immediate financial assistance. It also extends microloans to underserved segments of society, empowering individuals to meet their financial needs.

 

Manappuram Finance Ltd. is also a NBFC based in India, primarily known for its gold loan business. Established in 1992 and headquartered in Valapad, Kerala, the company offers a range of financial services to individuals and businesses, with a strong focus on rural and semi-urban markets.

 

The company provides short-term, collateral-backed loans against gold jewelry. It offers easy processing, quick disbursement, and flexible repayment options, making it a popular choice among customers needing urgent funds.

How does an increase in gold price benefit Muthoot Finance and Manappuram Finance?

When gold prices rise, the value of the pledged gold increases, allowing financers to offer higher loan amounts with a safer loan-to-value (LTV) ratio, and attracting more borrowers

 

In the past one year, Manappuram Finance and Muthoot Finance shares have gained 2.4 per cent and 37.8 per cent respectively against Sensex's rise of 16.5 per cent.