KOCHI: After taking a hit from demonetisation, gold loan companies are back on track by embracing digital economy. Buoyant stock markets and rise in gold price, too helped.
Manappuram and Muthoot Finance have seen their scrips rising post demonetisation. The former’s share price jumped from Rs 80 on January 27 to Rs 96.1 on Wednesday, while the Muthoot Finance stock rose from Rs 321 in the last week of January to Rs 416.
“After demonetisation, the industry has been shifting towards digital payments benefitting the organised players. As our average ticket size of loans is Rs 40,000, almost 70 per cent of transactions were done through cash. Post note-ban, we have seen a spurt in gold loan disbursements through cashless channels,” said George Alexander Muthoot, MD, Muthoot Finance. He added that unorganised players will be impacted as they don’t have online transaction facilities.
Gold prices have been showing firmness since January 2016. However, prices dropped by Rs 205 to end at Rs 28,800 a 10 gram on Wednesday.
Akshay Agarwal, MD, Acumen Capital Market India, said, “Both stock markets and gold prices are moving north. It is safe to assume the business of these entities has increased by 60 per cent compared to the note-ban period. As the overall economic activities increase, gold loan segment will find more takers,” he added.