Muthoot Finance Ltd’s shares rose by the most in two weeks after Managing Director George Alexander Muthoot said protests by employees in the company’s home state of Kerala will have little impact on its business.
“Business in Kerala is currently only 4.5 per cent” of the companies’ overall portfolio, said Muthoot in an analyst call on Monday morning, adding that the closing of 43 branches won’t “have any impact on the performance of our business.”
The stock rose as much as 3.7 per cent, the most in two weeks. Shares of the lender, which takes gold as collateral, had fallen in five out of the previous seven days of trading amid a month-long protest by employees demanding higher wages. The dispute has disrupted business at Muthoot’s Kerala branches, posing a key risk for the firm.
“Management made clear that closing branches in its home state is not going to impact profitability,” said Digant Haria, an analyst at Antique Stock Broking. “As a gold loan provider, Muthoot Finance doesn’t face as much liquidity risk as non-bank finance companies that borrow more from the market.”
