Muthoot 1Q27: Yield normalization drives down profitability

Research evidence excerpt

Muthoot 1Q27: Yield normalization drives down profitability

3 August 2026

Pranav Gundlapalle

+91 226 842 1407

India Financials pranav.gundlapalle@bernsteinsg.com

Muthoot Finance Ltd Ishan Mittal

+91 226 842 1442

Rating ishan.mittal@bernsteinsg.com

Outperform Anirudh Gupta

Price Target +91 226 842 1456

anirudh.gupta@bernsteinsg.com

MUTH.IN 4,500.00 INR

Muthoot Finance reported a mixed quarter, as healthy gold loan AUM growth was

Close Date 31 Jul 2026

overshadowed by a sharp ~300 bps contraction in NIM, with asset yields normalizing from

MUTH.IN Close Price (INR) 3,119.60

the elevated levels recorded in 2H26. Management expects yields to stabilize at 18–18.5%,

Price Target (INR) 4,500.00

but selective rate reductions, a higher mix of lower-yielding loans and limited relief on funding

Upside/(Downside) 44%

costs could keep profitability under pressure. While asset quality remains stable, the margin

52-Week Range 4,149.50/2,476.60

reset adds pressure to the current strong earnings growth trajectory.

ASIAX 1,914.70

Gold AUM growth remains robust despite a sequential correction in gold prices: FYE Mar

Standalone gold AUM grew 44% YoY (+6% QoQ) to INR 1.63 Tn, despite gold prices Div Yield 1.0%

declining ~4% sequentially, reflecting healthy underlying demand. Customer traction Market Cap (INR) (B) 1,252.42

improved, with active customers rising 2.6% QoQ to 6.58 Mn and loan accounts increasing EV (INR) (B) 2,635.32

5.4% to 10.91 Mn. Management indicated that AUM growth accelerated after May, following Performance YTD 1M 6M 12M

the initial transition to the new regulatory framework and product structures. It retained its Absolute (%) (18.2) 7.0 (10.7) 20.3

15% FY27 AUM growth guidance from the March 2026 base. ASIAX (%) 17.1 (3.2) 9.4 32.9