The gold loan boom is growing from strength-to-strength – gold loans amounted to Rs 4.61 lakh crore as on 31 March 2026, a jump of nearly 123.8% from a year earlier, according to RBI.
Gold loans are increasingly a way to meet business requirements or financial emergencies of the family, at a time when finding jobs / employment is difficult in urban areas. In rural areas too, farmers are increasingly relying on gold loans as a collateral for agriculture-related loans.
Gold loan NBFCs shine on Dalal Street
It’s no surprise that investors on Dalal Street are bullish on gold loan focused NBFCs – Manappuram Finance declined 3% to Rs 316 on Monday, and is trading not too far from its 52-week high of Rs 333.8 that was reached on 25 May, 2026.
Larger rival, Muthoot Finance, the biggest gold loan NBFC, was down 3.2% on Monday at Rs 3,248, and it had hit its 52-week high of Rs 4,149 on 29 January, 2026.
Manappuram vs Muthoot: A Deep Dive
We analyse the performance of these two-gold loan NBFCs in the March 2026 quarter as well as between FY23 and FY26 on various parameters – growth in gold loan AUM (asset under management), growth in net interest income (NII) and net profit, amongst others. The goal is to see which NBFC emerges as the better one, and consequently take a view on whether the large valuation gap between the two is justified.
Let’s start with valuations on the preferred valuation matrix – price-to-(standalone) book value.
Reasonable valuations of Manappuram Finance versus Muthoot Finance
| Name of gold loan NBFC | Price-to-(standalone) book value |
| Manappuram Finance | 1.9 times |
| Muthoot Finance | 3.5 times |
As is evident from the table, Manappuram Finance trades at a 45% discount to Muthoot.
Now’ let’s dig into the data to figure out whether this is justified.
Q4FY26 Growth: Aggressive Expansion vs. Sustained Margins
Manappuram Finance is attempting to catch up with its larger rival by aggressively growing its loan AUM – its standalone gold loan AUM grew 98% y-o-y to 48,814 crore in the March 2026 quarter.
This was much faster than the 49.6% y-o-y growth in standalone gold loan AUM of Muthoot Finance to Rs 1.54 lakh crore in Q4FY26.
The growing importance of gold loan financing to meet business or personal fund requirements is once again highlighted by the very strong growth in gold loan AUMs of both NBFCs.
Meanwhile, Manappuram Finance’s net yield was 17.7% in the March 2026 quarter as against 21.7% a year earlier.
And Muthoot Finance’s net interest margin was 13.38% in Q4FY26 as compared to 11.27% a year earlier.
The NII Trap: Rising Impairments Threaten Bottom-Line Growth
Manappuram Finance’s net interest income (NII) barely grew 5.9% y-o-y to Rs 1,193 crore in Q4FY26, despite the 98% y-o-y surge in its gold loan AUM in the quarter under review (refer table below).
The sluggish growth in NII for Manappuram Finance could be partly attributed to the ‘clean up’ of its loan book over the past several quarters, and that is also reflected in a rise in its impairment on financial instruments.
For instance, in FY25, its impairment on financial instruments was Rs 263 crore, a jump of 143.5% y-o-y. In FY26, impairment on financial instruments jumped 103.4% y-o-y to Rs 535.3 crore.
Meanwhile, Manappuram Finance’s asset quality was fairly stable in the March 2026 quarter – its net stage 3 loan assets to gross loan assets was 1.5% in the March 2026 quarter, broadly in turn with a year earlier.
However, Manappuram Finance’s impairment on financial instruments was Rs 215.6 crore in the March 2026 quarter, a jump of 172.2% y-o-y.
The above rise in impairment on financial instruments resulted in Manappuram Finance’s standalone net profit declining 9.4% y-o-y to Rs 375.5 crore in the March 2026.
In contrast, Muthoot Finance’s net interest income (NII) grew 78.8% y-o-y in the March 2026 quarter to Rs 5,193 crore, and it helped to offset the 111.5% y-o-y jump in its impairment on financial instruments to Rs 239.4 crore in the quarter under review.
Its asset quality has shown signs of improving — net stage III loan assets to gross loan was 2.04% in the March 2026 quarter as compared to 2.79% a year earlier.
Strong growth in NII helped Muthoot Finance’s standalone net profit rise 104.8% y-o-y to Rs 3,086.2 crore in the March 2026 quarter.
The core gold loan business is reflected in the standalone results of the two NBFCs.
Performance of Manappuram Finance versus Muthoot Finance in the March 2026 quarter
| Operational parameters | Manappuram Finance | Muthoot Finance |
| Gold loan AUM growth | 98% y-o-y | 49.6% y-o-y |
| Net interest income (change) | 5.9% | 78.8% |
| Net yield | 17.7% | 13.4% (net interest margin) |
| Impairment on Financial Instruments | 172.2% y-o-y | 111.5% y-o-y |
| Net Stage 3 Loan Assets to Gross Loan Assets | 1.5% | 2.04% |
| Standalone net profit (change) | -9.4% | 104.8% |
| Return on Equity | 11% | 30.6% |
The 3-Year Trajectory (FY23-FY26): AUM Surges, But Profits Diverge
A similar trend has been witnessed in the performance of Manappuram Finance between FY23 and FY26 – its standalone gold loan AUM has grown at a compounded annual rate of 37% during this period to Rs 48,814 crore at the end of FY26, and faster than its larger rival (view table below).
Muthoot Finance’s standalone gold loan AUM grew at a compounded annual rate of 34.6% between FY23 and FY26 to Rs 1.54 lakh crore.
Once again, Manappuram Finance’s standalone NII grew at a slower pace than its nearest rival — its NII grew at a compounded annual growth rate of 12.6% between FY23 and FY26 to Rs 4,634 crore.
In contrast, Muthoot Finance’s standalone NII grew at a compounded annual growth 36.9% between FY23 and FY26 to Rs 17,125 crore.
And Manappuram Finance had a rise in impairment on financial instruments in FY25 and FY26. For instance, in FY25, its impairment on financial instruments was Rs 263 crore, a jump of 143.5% y-o-y. In FY26, impairment on financial instruments jumped 103.4% y-o-y to Rs 535.3 crore.
As a result, Manappuram Finance’s standalone net profit grew at a compounded annual growth of barely 6.4% between FY23 and FY26 to Rs 1,524.7 crore.
In contrast, higher net interest income (NII) helped Muthoot Finance’s standalone net profit rise at a compounded annual growth of 42.9% between FY23 and FY26 to Rs 10,134 crore.
Growth between FY23 and FY26 (CAGR, standalone basis)
| Manappuram Finance | Muthoot Finance | |
| Gold loan AUM | 37% | 34.6% |
| Net interest income | 12.6% | 36.9% |
| Standalone net profit | 6.4% | 42.9% |
Capital Efficiency: Muthoot’s 30.6% RoE Advantage
Manappuram Finance has a return on equity (RoE) of 11%, according to Screener.in, and it is 30.6% for Muthoot Finance. The difference is stark.
| NBFC | Return on Equity (%) |
| Manappuram Finance | 11% |
| Muthoot Finance | 30.6% |
The Bain Capital Catalyst: A Private Equity Play
US-based Bain Capital via its subsidiaries has acquired a 10% stake in Manappuram Finance in the March 2026 quarter, and that is expected to rise to 41%, depending upon the response to the open offer, as per the agreement entered into earlier.
Investors on Dalal Street will be keeping a close eye on Bain Capital and its role to improve the core operational parameters of Manappuram Finance over the next few quarters, and to equal or even better larger rival, Muthoot Finance.
The Final Verdict: Is the 45% Discount Justified?
Manappuram Finance trades at 45% discount to its larger rival, Muthoot Finance. From the numbers we have reviewed, it appears that the valuation clearly reflects the true health of the business.
Having said that, the strong growth in the gold loan segment is expected to continue over the next few quarters. Plus, Manappuram now has the backing of a private equity firm. Perhaps this time around, the NBFC will be able to make the most of the tailwind.
Readers could add the gold loan NBFCs to their watch list of stocks for 2026 and see if trend of fast growth continues; and in case of Manappuram, track whether expectation of a sharp improvement is realised.
Disclaimer:
Amriteshwar Mathur is a financial journalist with over 20 years of experience.
The writer and his family have no shareholding in any of the stocks mentioned in the article.
Disclaimer: The website managers, its employee(s), and contributors/writers/authors of articles have or may have an outstanding buy or sell position or holding in the securities, options on securities or other related investments of issuers and/or companies discussed therein. The content of the articles and the interpretation of data are solely the personal views of the contributors/ writers/authors. Investors must make their own investment decisions based on their specific objectives, resources and only after consulting such independent advisors as may be necessary.