Muthoot Microfin to foray into Andhra Pradesh, Telangana in FY24

After a gap of 13 years following the Andhra Pradesh microfinance crisis of 2010, Muthoot Pappachan Group’s microfinance arm Muthoot Microfin Ltd (MML) is all set to re-enter the Telangana and Andhra Pradesh market during the current financial year. Driven by the foray into the new markets, the company is expecting over 35 per cent rise in its assets under management (AUM) to Rs 12,500 crore during the current financial year, up from 9,209 crore in 2022-23.

It is also expecting the disbursement too to touch Rs 11,000 crore during the year. In 2022-23, the company saw its disbursements increasing to Rs 8,104 crore, up from Rs 4,600 crore last year. “Now that we have Rs 9,200 crore in terms of AUM, we expect it to cross Rs 10,000 crore in the next couple of months and our aim is to have a 35 per cent growth and reach somewhere around Rs 12,500-13,000 crore this financial year. In terms of disbursements, we will close to around Rs 11,000 crore in 2023-24,” said Sadaf Sayeed, Chief Executive Officer of MML.

The microfinance major is at present having presence in 18 Indian states, except Andhra Pradesh, Telangana, Jammu and Kashmir and North East. Though it was present in undivided Andhra Pradesh till 2010, had exited after the government started regulating the sector in the state. The plan to re-enter the market comes after a Telangana High Court ruling that stated that regulations of the sector come under the Reserve Bank of India and not the state.

“We look forward to entering into Telangana Andhra Pradesh. We are present in 18 states and are market leaders in Kerala and Tamil Nadu. Regulations have been removed. We look to enter that market this financial year,” Sayeed added. The company indicated that it is unlikely to have its planned initial public offering (IPO) before the next Lok Sabha elections and also till the market conditions improve.

The company is looking to tap new investors going ahead. While the promoter group holds around 71 per cent in the company, PE fund Greater Pacific Capital (GPC) holds around 16 per cent and US-based Creation Investments Capital Management around 10 per cent, jointly holding around 26 per cent. “GPC has infused in three rounds and now we will look at a new investor. Somebody who can participate in the IPO,” he added.  

Interestingly, during the fourth quarter of the financial year 2022-23, MML’s net profit more than doubled to around Rs 946 crore, from around Rs 380 crore in January to March quarter last financial year. For the entire financial year 2022-23, profit increased over two-fold to Rs 1,639 crore from Rs 474 crore in 2021-22.

Similarly, total revenue from operations during the quarter increased by 74 per cent to Rs 4,438 crore during the quarter under review and 72 per cent to Rs 14,288 crore during the entire financial year.