Muthoot Finance is in focus after after it reported a strong Q2FY26 performance driven by robust loan growth, higher margins, and improved asset quality. Nuvama said that “demand for gold loans from low-income borrowers shall stay strong.”
Muthoot Finance: Guidance raised for FY26
The gold loan financier’s performance strengthened as gold prices touched multiple record highs during the quarter. Backed by strong momentum, Muthoot Finance revised its FY26 AUM growth guidance sharply upward from 15% to 30–35%. The company expects loan yields to stabilise between 18.5% and 18.75% even as recoveries from older NPAs taper.
Management also expects cost of funds to decline by another 15–20 basis points in FY27 as borrowings are mostly linked to one-year MCLR.
Muthoot Finance: AUM surges 47%, AUM surges 47%
Nuvama noted, “Muthoot reported a big beat on assets under management (AUM) growth, net interest margin (NIM) and credit cost.”
The gold loan financier’s AUM rose 10% quarter-on-quarter(QoQ) and 47% year-on-year (YoY), significantly ahead of expectations.
Gold AUM grew 10% sequentially, while non-gold products such as personal loans and SME loans expanded 8% QoQ and 83% YoY, taking their share to 6% of the loan book.
Subsidiaries also supported growth. Muthoot Money posted a 182% increase in AUM, led mainly by gold loans, while its vehicle finance portfolio continued to shrink.
Belstar Microfinance added 23 gold loan branches in the first half of FY26 as it builds out a diversified portfolio.
Muthoot Finance: Margins expand as yields rise
The company recorded a strong margin performance during the quarter. Loan yields improved by 33 basis points quarter-on-quarter, while core yields rose 53 basis points as lending shifted towards higher-yield segments. Cost of funds fell by 10 basis points, helping net interest margins rise by 51 basis points.
Net interest income increased 15% QoQ and 58.5% YoY. Core NII grew at an even faster pace of 18% QoQ. Pre-provision operating profit rose 17% over the previous quarter and 71% over last year.
Muthoot Finance: Profit nearly doubles year-on-year
Muthoot Finance’s profit after tax jumped 87% year-on-year and 15% quarter-on-quarter to Rs 23,452 crore. Credit cost stood at 34 basis points, higher than the previous quarter but below expectations.
Muthoot Finance: Asset quality improves
The company continued to show improvement in asset quality. Stage 3 loans fell 4% quarter-on-quarter, bringing the gross Stage 3 ratio down to 2.25% from 2.58% in Q1. Stage 2 loans declined sharply by 50% QoQ. Gold auctions remained minimal at Rs 0.05 crore compared with Rs 0.13 crore in Q1.