Shares of Muthoot Finance Ltd. climbed 1% today, reaching Rs 2433.95, following the non-banking financial company (NBFC) reporting robust financial results that exceeded second-quarter expectations. The Kochi-based firm announced a significant 46% year-on-year increase in its consolidated gold loan Assets Under Management (AUM) for the first half of fiscal year 2027, reaching Rs 1,93,212 crore as of September 30, 2026.
The company's overall consolidated loan AUM also saw a substantial rise, growing 42% year-on-year to Rs 2,09,317 crore by the end of September. This strong performance contributed to a standalone net profit of Rs 2,977 crore in Q2 FY27, marking a 27% increase compared to Rs 2,345 crore in the same period last year. Total income for the July-September quarter surged to Rs 8,842 crore from Rs 6,442 crore previously, with interest income alone climbing to Rs 8,730 crore.
Management Raises Growth Outlook
Muthoot Finance's management has expressed confidence in its future trajectory, revising its gold loan growth guidance for FY27 upwards to 25% from an earlier projection of 15%. Alexander George Muthoot, Managing Director, highlighted the company's improved operational efficiency and prudent cost management. "Our Standalone Profit After Tax for H1 FY27 rose by 26% YoY to Rs 5,527 crore, reflecting improved operational efficiency, prudent cost management, and a disciplined approach to growth," he stated. "This consistent upward trajectory underscores the resilience of our business model and the continued trust our customers place in us."
Analyst Views and Price Targets
Brokerage firm Nuvama acknowledged Muthoot Finance's stronger-than-expected growth and net interest margin (NIM) improvements. Consequently, Nuvama has raised its earnings estimates for the company, anticipating a Return on Assets (RoA) of 5-5.8% and a Return on Equity (RoE) of 24-28%. However, Nuvama also cautioned that asset quality would require close monitoring, citing changes in repayment cycles and rising macroeconomic distress.
Despite the positive financial results, Nuvama maintained its 'HOLD' recommendation on Muthoot Finance's stock, adjusting its target price downwards to Rs 2,675 from Rs 3,100 previously. This revised target values the stock at 1.5x September 2028 estimated adjusted book value (ABV), with subsidiaries contributing an additional Rs 157 per share.