Mufin Green Finance Fundamental Analysis – Financials & More

Fundamental Analysis of Mufin Green Finance : EV Financing NBFC has raised ₹140 crore in Series B equity funding round with a mission to create equal financial opportunities for the underprivileged in the country using clean technologies. The company we are talking about is Mufin Green Finance. In this article, we will conduct a fundamental analysis of Mufin Green Finance and learn more about the company and its finances.

Mupin Green Finance Co., Ltd.

Company Overview

Established in 2016, Mufin Green Finance is attracting attention as an NBFC specializing in electric vehicle (EV) lending aimed at generating profits. It operates as a non-depository NBFC recognized by the Reserve Bank of India and focuses on investment and lending provisions.

Mufin Green Finance is a subsidiary of Hindon Mercantile Limited, a technology-driven company that facilitates income-generating lending and is pioneering climate finance in India. Its reach spans 14 states and over 150 cities, and it serves as the leading financial institution for the EV sector. With over 24,191 borrowers and over $350 million worth of financed EV vehicles, the company has deployed $4.9 billion worth of assets in leases, contributing significantly to a total reduction of 173,788 tonnes of carbon emissions.

SBI and IREDA are lending partners of the company and Incofin India Progress Fund is an investor. As of March 31, 2023, the company had 1.99% of net NPAs at net generation ratio. The company has only one business segment, namely financial and investment activities, and no activities outside India.

Industry Overview

India’s GDP is expected to grow robustly in excess of 6% in fiscal 2024, indicating a promising economic trajectory. Non-banking financial companies (NBFCs) continue to outperform scheduled commercial banks (SCBs) in credit expansion, playing a significant role in the Indian financial landscape. The growing importance of NBFCs is further highlighted by the steady increase in credit to GDP and increasing dependence on credit provided by SCBs.

With a growing workforce and a growing middle- and low-income population, the need for financial services will increase dramatically. India is also expected to become the world’s fifth-largest automobile market by 2025, with annual electric vehicle sales expected to reach 4 million units by then and 10 million units by 2030.

The electric vehicle market in India is expected to grow at a remarkable CAGR of 66.52% to reach USD 113.99 billion by 2029, driven by the global adoption of electric micro-mobility vehicles. These trends collectively illustrate a dynamic environment featuring significant growth opportunities within India’s financial and electric vehicle sectors.

Mufin Green Finance – Finance

Sales and Net Profit

Mufin Green Finance reported revenue of Rs 35 crore in FY23, a 133% increase in revenue compared to Rs. 1.5 billion dollars in 2022. Net profit in FY23 declined 27% from Rs 11 crore to Rs 8 crore compared to FY22.

Over five years, sales and net profit grew at a CAGR of 84.81% and 27.79%, respectively. A closer look at the data shows that revenue and profit declined in FY21. This is primarily due to the decline in stock market valuations due to the COVID-19 pandemic, which has impacted the company’s investment and profitability valuation.

Profits in FY23 declined due to increased business operations, which resulted in higher operating expenses. The table below shows Muffin Green’s sales and profits over the past five years.

profit

The financial firm reported an operating profit margin of 46.7% and net profit margin of 23.08% in FY23, compared to an operating profit margin of 84.05% and 71.32% in FY22. Operating profit margins are decreasing but have been positive for the past several years, except in 2020 due to COVID-19. Net profit margin also continued a similar trend due to high operating costs due to the expansion of the electric vehicle business.

The five-year average operating profit margin and net profit margin are impacted by higher losses in FY20. The table below shows Mupin Green’s operating profit margin over the past five years.

rate of return

When it comes to returns, Muffin Green’s business does not generate healthy returns on capital employed and equity capital. RoCE and RoE in FY23 stood at 10.23% and 5.3%, respectively.

RoCE and RoE ratios decreased due to increased operating costs and lower profits. Over the long term, ROCE has improved, surpassing the five-year average of 8.48%. The table below shows Muffin Green’s ROE and RoCE over the past five years.

leverage ratio

Since Mufin Green Finance is an NBFC, analysis of leverage ratio is not informative.

stock holding pattern

Mufin Green Finance – Key Indicators

future prospects

• The target is to disburse INR 500 billion worth of income-generating EV loans over the next five years.
• The company plans to focus on expanding scale by improving efficiency.
• The key focus is protecting the portfolio and containing costs.
• Establishing PAN India presence and enabling financing of all EV products under one roof.

conclusion

In concluding our article on the fundamental analysis of Mufin Green Finance Limited, we have looked at Mufin Green Finance Limited’s business, industry, finances, and future prospects. The company appears optimistic and has higher growth opportunities. Prior to investment, additional analysis is required to determine the risk and return characteristics and suitability of the company. Please share your thoughts in the comments section below.

Written by Ashish Agarwal

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