Muthoot Finance Shares Rise 10% as Strong Gold Loan Demand Boosts Q2 Earnings

Muthoot Finance Shares Rally 10% as Record Gold Loan Demand Fuels Strong Q2 Earnings

Shares of Muthoot Finance surged nearly 10 percent on November 14, marking a fresh 52-week high, after the gold loan financier posted a stellar second-quarter performance for FY26. The sharp rally in Muthoot Finance shares comes amid soaring gold prices, robust loan growth, and improved asset quality across the company’s lending portfolio.

The stock hit the upper circuit at ₹3,730.30 on the BSE, reflecting renewed investor confidence. The broader rally extended to other gold loan financiers as well, with IIFL Finance and Manappuram Finance rising close to 4 percent each in early trade. Market analysts attribute this momentum to strengthening gold loan demand and favorable sectoral tailwinds as customers increasingly pivot toward secured credit options.

Muthoot Finance Q2 Results Deliver Strong Profit and AUM Growth

On November 13, Muthoot Finance reported a standalone net profit of ₹2,345 crore, an impressive 87.4 percent year-on-year (YoY) increase compared to ₹1,251 crore in the same quarter last year. The company’s outstanding performance was driven by higher loan disbursements, expanded customer base, and robust gold loan traction supported by rising gold prices.

Net interest income (NII) surged 58.5 percent YoY to ₹3,991 crore, underscoring the company’s strengthened core lending operations. The lender also recorded its highest-ever standalone loan AUM at ₹1,32,305 crore, along with a record gold loan AUM of ₹1,24,918 crore as of September 30, 2025.

This extraordinary growth reinforces Muthoot’s leadership in India’s gold loan market, where rising gold prices and tightening unsecured credit norms have pushed borrowers toward collateral-backed financing.

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Management Upgrades FY26 Gold Loan Growth Guidance to 30–35%

Commenting on the performance, George Jacob Muthoot, Chairman of Muthoot Finance, said the company’s historic AUM levels reflect the deep trust placed by its customers and the effectiveness of its customer-centric model.

He noted:
“Our leadership in the gold loan segment underscores the strong customer faith in our franchise, supported by high new-customer acquisition and repeat footfalls. The consistent growth in consolidated AUM demonstrates our ability to serve millions of borrowers efficiently.”

Meanwhile, Managing Director George Alexander Muthoot announced a significant revision in the company’s growth outlook. Muthoot Finance has upgraded its FY26 gold loan growth guidance from 15% to 30–35%, citing favorable structural tailwinds.

The management believes that RBI’s supportive regulatory stance, coupled with higher gold prices and tighter norms for unsecured credit, will further accelerate demand for gold-backed loans. The company also aims to steadily expand its non-gold loan portfolio—including personal loans, home loans and business loans—while keeping non-gold loan AUM at 12–15 percent of total consolidated AUM.

Muthoot Finance sees encouraging recovery trends in the microfinance segment as well, supported by regulatory guardrails and improved underwriting practices.

Company to Raise ₹35,000 Crore Through NCD Issuance

Alongside its quarterly results, Muthoot Finance also announced board approval to raise ₹35,000 crore through the issuance of redeemable non-convertible debentures (NCDs) via private placement. The fundraising will be executed in multiple tranches and is intended to support future lending growth as the company capitalizes on rising gold loan demand.

Analysts say this move provides Muthoot Finance with additional liquidity buffer and strengthens its ability to scale lending operations without compromising capital efficiency.

Brokerages React: Motilal Oswal Raises EPS Estimates, Bernstein Maintains ‘Outperform’

Brokerage sentiment remains largely positive, with Motilal Oswal Financial Services maintaining a ‘Neutral’ rating but raising its target price to ₹3,800, implying a potential upside of nearly 12 percent from the previous close of ₹3,393.10.

The brokerage highlighted the company’s strong operating performance, driven by:

• Robust gold loan growth

• Improvement in GS3 ratios

• Increase in gold tonnage

• Higher spreads due to lower NPAs

• Declining cost of funds (CoF)

Motilal Oswal also upgraded its FY26/FY27 EPS estimates by 10 percent, factoring in stronger-than-expected loan growth and sustained net interest margins (NIMs). The firm noted that Muthoot Finance shares currently trade at 3.1x FY27E P/BV and 14x P/E, benefiting from favorable industry conditions including a sharp rise in gold prices and increased demand for gold-backed lending.

Global research firm Bernstein maintained its ‘Outperform’ rating with a target price of ₹3,400, reflecting confidence in Muthoot’s ability to maintain best-in-class profitability and industry-leading gold loan growth.

Market Outlook: Strong Gold Prices and Credit Tightening to Support Growth

With gold prices at multi-month highs and unsecured consumer credit facing stricter regulations, analysts expect gold loan demand to remain strong through FY26. Muthoot Finance, with its extensive branch network and dominant market share, is positioned to capture this growing demand.

As long as gold prices remain elevated and customers shift toward secured borrowing, Muthoot Finance shares may continue to see strong interest from both retail and institutional investors.

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