Muthoot Finance shares crashed over 8% on Friday despite the gold loan financier reporting a massive 105% year-on-year surge in standalone net profit to ₹3,086 crore for Q4 FY26, up from ₹1,508 crore in the same period last year. According to The Economic Times, the brokerage house Motilal Oswal has maintained a ''Neutral'' rating, citing rising bad loans, RBI rule changes and increasing competition as key concerns weighing on the outlook. The shares have declined more than 8% in one month and 14% in 2026 so far, with the company currently having a market capitalisation of around ₹1.33 lakh crore.
As reported by The Economic Times, the company delivered exceptional growth with revenue from operations surging more than 68.5% to nearly ₹8,180 crore for the quarter under review, compared to ₹4,854 crore in the corresponding quarter of the previous financial year. For the entire financial year 2026, Muthoot Finance reported a 95% YoY increase to its highest-ever standalone profit after tax of ₹10,134 crore. The company also benefited from gold loan assets under management (AUM) rising 50% YoY to ₹1.54 lakh crore, the highest-ever, with spread expansion of ~60bp quarter-on-quarter to 12.5% as yields rose, supported by strong loan growth, higher lending yields and treasury-related income.
According to The Economic Times, the company faced pressure in customer additions and gold tonnage during the quarter. Gold tonnage declined around 4% sequentially to 196 tonnes, while the customer base slipped nearly 2% quarter-on-quarter to around 64.1 lakh customers. Management highlighted that the company lost customers in the smaller-ticket loan category during the year, though this weakness was partly offset by stronger customer additions in higher-ticket loan categories ranging between ₹50,000 and ₹2 lakh. Jefferies noted that customers fell 2% QoQ reflecting some churn in lower ticket customers.
Despite the strong results, analysts maintained mixed ratings with Jefferies maintaining its 'Buy' rating but reducing its target price to ₹4,350, implying an upside potential of more than 23% from the stock's previous closing price of ₹3,531. Morgan Stanley held an 'Overweight' call with a target price of ₹4,330, implying an upside potential of 22%. Motilal Oswal maintained a 'Neutral' rating but raised its target price to ₹3,720, implying an upside potential of 5%. Jefferies lifted FY27-28e EPS estimates by 6-8% factoring stronger growth, higher margins and lower opex, expecting 15% EPS CAGR and ROE of 25-27% over FY26-28e.
As noted by Motilal Oswal, a key concern was deterioration in asset quality due to a regulatory change introduced by the Reserve Bank of India, which resulted in a rise in Gross Stage-3 assets and higher provisioning requirements during the quarter. The brokerage also highlighted that several highly rated Non-Banking Financial Companies are aggressively entering the gold loan segment, increasing competitive intensity and raising risks of market share losses for Muthoot Finance. Jefferies noted that while gold loan growth has lagged the rise in gold prices and trailed some peers, there is significant catch-up potential.
