Gold loan companies are seeing strong growth as loans against gold grew by 42% to reach Rs 15.6 lakh crore as of November 2025, according to an analysis by Jefferies. The international brokerage house notes that competition is increasing with several new entrants adding branches, while a proposed easing of branch expansion rules could improve flexibility for large players. With gold prices rising 17% so far this year.
Jefferies says the price trend, along with available loan-to-value (LTV) buffer, can support growth in the sector. Therefore, the question is what is the right strategy for stocks in this sector? Jefferies outlines its key investment ideas.
Jefferies on Muthoot Finance: ‘Buy’
Jefferies has maintained its ‘Buy’ rating on Muthoot Finance with a price target of Rs 4,750 per share. According to the brokerage, this implies a potential upside of 35% from levels prevailing at the time of the report.
The firm believes the risk-reward has improved following the recent correction in the stock price.
“Post stock price correction, risk reward seems attractive for Muthoot Finance,” the report states.
Jefferies adds, “We continue to see healthy growth with scope for more consensus earnings upgrades at Muthoot Finance.”
The brokerage notes that valuations at 3.2x FY27e book value and 13x FY27e earnings “seem reasonable.”
Jefferies on Manappuram: ‘Hold’
On the other hand, Jefferies has assigned a ‘Hold’ rating to Manappuram Finance with a target price of Rs 285 per share, indicating a downside of around 3%.
The brokerage states that while margins appear to have stabilised, further rerating will depend on execution and improvement in return ratios.
“ Net Interest Margins have likely bottomed out, but execution of turnaround & ROE expansion stay key to re-rating,” Jefferies says in the report.
Unlike Muthoot, the Mannapuram Finance has not indicated a strong immediate rerating trigger and has retained a more measured stance.
Muthoot vs Manappuram: 5 emerging themes
Based on Jefferies’ analysis, five key themes emerge in comparing the two companies: the impact of rising gold prices on loan growth, branch expansion flexibility, competition from banks, market share trends, and operating efficiency.
“Gold prices are up 17% YTD, which along with Loan-to-Value (LTV) buffer can support healthy growth at gold NBFCs,” Jefferies notes.
The brokerage also observes that the stock performance of gold NBFCs has historically been correlated with gold prices.
Muthoot vs Manappuram: The branch expansion battle
Jefferies points out that earlier requirements for prior approvals for branch expansion beyond 1,000 branches had constrained expansion at both Muthoot and Manappuram. During this period, mid-sized and new NBFC entrants added around 935 branches in FY26 year-to-date (YTD).
“Proposed easing of regulatory norms would increase flexibility to large gold NBFCs to expand branches & defend share,” the report states.
Jefferies notes that Muthoot has indicated it may step up branch additions to around 250 per year if restrictions are removed.
Muthoot vs Manappuram: Gold focus and operating strength
Jefferies highlights differences in operating metrics between the two companies. The report shows that AUM per branch at Muthoot stands at Rs 28.10 crore, significantly higher than Manappuram. This translates into lower operating expenses relative to assets.
“Branch productivity at MUTH is Rs281mn per branch, almost 3/1.8x MGFL and IIFL, which translates into much lower opex to AUM,” according to Jefferies.
Customer count per branch is also higher at Muthoot, at around 1,300, compared to about 650 at Manappuram.
Muthoot vs Manappuram: The battle for market share
Jefferies notes that banks have expanded rapidly in retail gold loans, with their share rising to 55% as of December 2025 from 50% in March 2025. However, penetration remains relatively low.
“Proportion of household gold stock pledged with organised financiers has inched up to 8% (7% FY24) per our estimate,” the report states.
This suggests continued headroom for growth for organised gold financiers, including Muthoot and Manappuram, even as competition increases.
Conclusion
Jefferies’ maintains a ‘Buy’ rating on Muthoot, citing attractive risk-reward and strong operating metrics.
On Manappuram, Jefferies retains a ‘Hold’ rating, stating that further rerating will depend on execution and return expansion.
With gold prices up 17% year-to-date and regulatory changes under consideration, Jefferies indicates that operating efficiency, branch expansion flexibility and gold price trends will be central to performance for both companies in the coming quarters.
Disclaimer: This article provides factual analysis only and is not, and should not be construed as, an offer, solicitation, or recommendation to buy or sell securities. Investors must conduct their own independent due diligence and seek advice from a SEBI-registered financial advisor.