Muthoot Finance: 1Q27: Miss on lower yields; growth momentum intact

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Muthoot Finance

1Q27: Miss on lower yields; growth

momentum intact

Reiterate Rating: BUY | PO: 4,030 INR | Price: 3,120 INR

Earnings miss on lower yields; Gold AUM growth +6% QoQ

03 August 2026

Muthoot Finance (MUTH) 1Q PAT at INR25.5bn (+25% YoY) missed BofAe by 15%,

primarily driven by lower NII at INR43.6bn (+26% YoY, -17% vs BofAe). Yields declined

sharply to 17.9% (vs 19.6% in 4Q), reflecting lower pricing under revised product

schemes and the absence of one-off benefits (recoveries, renewals and rollovers) seen

over the last 2 quarters. MUTH expects yields to stabilize at a steady-state 18-18.5%

going forward. The earnings miss was partly offset by (i) lower opex (-8% vs BofAe), (iii)

lower provisions, with GS-3 down at 2.28% (vs 2.35% QoQ), whereas GS-2 rose to

1.09% (vs 0.65% QoQ). Overall ECL provisioning moderated to 1.03% (vs 1.10% QoQ).

GL demand remains strong with AUM growth at +6% QoQ. Management sticks to 15%

AUM growth guidance and expects to consider revision based on 2Q.

Equity

Maintain Buy with new PO Rs4,030 – We cut our earnings forecasts by 3-5% as we

factor lower yields, partly offset by better growth and lower provisions. Further we

increase beta, leading to 6% decline in PO to INR4,030.

Key risks: rising competitive intensity, gold price decline

New customer acquisition improved for MUTH in 1Q with new customers taking fresh

loans (as % total active customers) at 6.9% in 1Q (vs 6.7% QoQ), while ATS remained

broadly flattish (+0.6% QoQ) post 6 quarters of continued expansion. The company

highlighted that majority of customers availed loans under 75% LTV, with mere 3-4%

disbursements at 85% LTV, as customers are vigilant on their repayment potential.

MUTH on a SA basis expects 200-250 gold loan branch expansion in FY27 (vs 170

opened in FY26). We believe the key risks to stock might emerge from further gold price

correction given the historical stock price correlation with gold price high at 95%+ and

major NBFCs increasing their focus on gold financing.

Estimates (Mar) (Rs)

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EPS Change (YoY)

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