According to reports from Live Mint, Muthoot Finance shares fell 6% on Friday despite delivering exceptional financial results for FY26. The company's March quarter (Q4FY26) net profit more than doubled year-on-year to ₹3,080 crore, while FY26 profit increased by 95% to ₹10,134 crore. However, the Street appears to be looking beyond these headline numbers, which were significantly aided by the extraordinary rally in gold prices during FY26.
As reported by Live Mint, gold prices surged roughly 65% during FY26 amid geopolitical uncertainty, aggressive central bank buying, and the fading appeal of US Treasuries. This drove Muthoot's consolidated AUM to jump 54% to ₹1.65 trillion, while interest income rose 61% to ₹27,067 crore in FY26. Unlike Manappuram Finance, which sacrificed margins to chase growth, Muthoot focused on profitable growth driven by gold loans, which constitute over 90% of its book.
According to Live Mint, Muthoot's net interest margin (NIM) expanded from 11.3% in Q4FY25 to 13.4% in Q4FY26, while Manappuram's NIM compressed sharply from 13.5% to 9.8%. Muthoot's gold loan yields expanded to 20.8% in Q4FY26 after selective price hikes of 0.5-1%, though part of this was aided by non-recurring income including interest recoveries from legacy NPAs. The company's active customer base declined 1.8% sequentially in Q4FY26, with gold tonnage continuing to decline sequentially.
As reported by Live Mint, gross NPA improved to 2.34% in March 2026 from 3.35% a year ago, though it worsened sequentially. The company plans to add 400-500 gold-loan branches, including those under Belstar, with RBI removing the requirement for prior approval for branch expansion by large gold loan NBFCs. Jefferies India's analysts expect 15% EPS CAGR and 25% ROE over FY26-28, supported by higher gold prices, LTV headroom, and branch expansion.
According to Live Mint, the management's FY27 AUM growth guidance stands at 15%, a sharp moderation from FY26's exceptional pace. Competition from deep-pocket lenders with lower costs of funds has rapidly entered the gold loan market, while demand may fade amid increasing availability of unsecured loans. The company's nearly 60% stock return over the past one year already reflects its premium positioning, and markets may no longer reward headline growth alone.
