Muthoot Finance, whose main business is lending against gold as collateral, announced a 10.4% increase in its income from operations to Rs 1,354 crore in the December 2012 quarter, compared to a year ago.
The company’s lending costs were in check during the quarter, rising by 9.9%. But operational costs rose significantly higher than revenues did, rising by 19.8%, partly attributable to expansion and also perhaps due to provisioning for bad loans.
Employee costs, rent and depreciation rose significantly, while advertisement costs declined. Other expenses, which includes provisioning for bad loans, rose by 27.7%.
As a result, its net profit rose by 7.6% to Rs 270 crore, which is relatively low. But there is a high base effect also at play, as net profit had risen by 61% in the December 2011 quarter. Sequentially too, profit growth has been flat.
But investors seem to be happy with the outcome, with the share price up by 4.95% at the time of posting. Muthoot’s results seem to have been better than expectations, despite a muted growth in both income and earnings. The stock had fallen from Rs 231 on January 8 to Rs 216 before its results were announced.
Access the financial results table here.