Manappuram, Muthoot zoom up to 45% in 6 months; what's behind the surge?

The expanding market for gold backed loans in India - amid a shift in borrower preference towards gold loans - should benefit gold finance companies, analysts said.

Share price of gold finance companies

 

Shares of gold finance companies are in focus with Manappuram Finance hit a new high of ₹291.10, gaining 3 per cent on the BSE in Wednesday’s intra-day trade. Muthoot Finance also moved up 3 per cent to ₹2,772.85 in otherwise a subdued market. The stock is trading close to its record high level of ₹2,800.10 touched on August 18, 2025. In comparison, the BSE Sensex was down 0.04 per cent at 80,126.29 at 09:51 AM.

 

In the past six months, Manappuram Finance has zoomed 45 per cent, while Muthoot Finance has soared 30 per cent, as compared to 10 per cent rise in the benchmark index.

 

Why gold financiers' stocks are outperforming the market?

 

The recent Reserve Bank of India (RBI) guidelines on gold loans will bring greater transparency and further streamline the lending process, analysts said. While the recent industry cuts create a favorable credit environment, with these supportive tailwinds and continued focus on innovation and services, these companies, analysts believe, are well positioned to sustain strong growth through financial year 25-26 (FY26) and beyond.

 

In July 2025, the RBI raised the loan-to-value (LTV) ratio for lending against gold to 85 per cent for borrowings under ₹2.5 lakh from the present 75 per cent. The LTV ratio has been fixed at 80 per cent for loan amounts between ₹2.5–5 lakh and 75 per cent for loans above ₹5 lakh. Lenders have time until April 1, 2026, to prepare for the changes.

 

"India's robust medium-term growth potential and large, diversified economy should continue to support non banking financial institutions (NBFIs') business prospects and profitability. Easing domestic interest rates, moderate inflation and improved system liquidity should help provide a buffer against global economic uncertainty and export-related risks, particularly as India's NBFIs are mostly domestically focused," Fitch Ratings said in Muthoot Finance’s rating action on August 22, 2025.

 

The expanding market for gold backed loans in India - amid a shift in borrower preference towards gold loans - should benefit Muthoot Finance, which is the market leader in this segment with long-standing operations, it added.   Gold loan industry in India

 

  Looking forward, the gold loan industry in India is projected to double in value by the financial year 2028-29, underpinned by several critical trends. A primary factor is the anticipated expansion of the organised sector, which is expected to increase its market share from 37 per cent to over 50 per cent by the financial year 2028-29, Manappuram Finance said in its FY25 annual report.

 

This transition is driven by the formalisation of lending practices, enhanced customer experiences, and a growing trust in regulated entities. Furthermore, government initiatives such as the Digital India Mission aim to improve broadband and mobile connectivity in rural areas, thereby enhancing the digital infrastructure required for a swift uptake of gold loans, the company said.

 

Meanwhile, the microfinance (MFI) sector is expected to navigate short-term volatility while positioning itself for a measured recovery in FY25-26. As national priorities like Atmanirbhar Bharat and Viksit Bharat 2047 gain momentum, MFIs are poised to play a pivotal role in advancing equitable, technology-enabled, and impact-driven financial empowerment across India, Manappuram Finance said.