In 2022 so far, T the shares of Muthoot Finance Ltd and Manappuram Finance Ltd have slumped 28% and 32%, respectively. With that, they have massively underperformed the Nifty Financial Services index, which rose nearly 10%.
Remember, to beat rising competition and retain high-value customers, companies had launched teaser loans in December 2021, which weighed on the net interest margin (NIM). Teaser loans offer lower interest rates for a fixed duration of time. While the loans were discontinued in April, subdued earnings performance in recent quarters has failed to revive sentiments towards these stocks. In Q2FY23, the assets under management of Muthoot's gold loan business was flat sequentially, and declined 6.3% quarter-on-quarter for Manappuram.
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