Manappuram Finance and Muthoot Finance, two of the country’s top gold financing companies, rose as the central bank’s move is expected to benefit these firms.
IIFL shares closed at ₹477.7, after experiencing their largest single-day fall since November 2008. Muthoot Finance ended 2.1% higher at ₹1365.2 after rising as much as 10.6% earlier in the day. Manappuram Finance was up 1.3% to close at ₹186.2 after gaining up to 8.2%.
Manappuram Finance and Muthoot Finance will directly benefit from the move as gold financing is their core business, said Raj Gaikar, research analyst at Samco Securities.
“Muthoot Finance mainly focuses on the gold loan lending business while Manappuram is engaged in other formats of lending businesses also. More than 80% of Muthoot Finance’s total loans are gold loans, this indicates they will focus on gaining customers of IIFL,” said Gaikar. “Since Gold prices are already soaring to lifetime highs, these two companies are likely to be big beneficiaries.”
Gold prices crossed ₹65,000 for for the first time, touching an all-time high, during the day on MCX Tuesday.Over 32% of IIFL Finance consists of gold loans with assets under management (AUM) of ₹20,733 crore.