Muthoot Finance hits new high on strong earnings hope; up 31% from Nov low

Shares of Muthoot Finance hit a new high at Rs 2,308.75, gaining 3 per cent on the BSE in Wednesday’s intra-day trade on expectations of strong earnings for the December 2024 quarter (Q3FY25). The stock price of the India’s largest gold financing company in terms of loan portfolio surpassed its previous high of Rs 2,274.15 touched on Budget day i.e. February 1, 2025.

 

Since November 14, 2024, the stock price of Muthoot Finance has outperformed the market and zoomed 31 per cent after the management revised upward its earlier guidance for FY25 on gold loan growth from 15 per cent to 25 per cent.

 

As part of the core business, Muthoot Finance provides loans secured against household gold jewellery at highly affordable rates and amazing product features. Globally, the Group has presence across, the US, UK, UAE, Costa Rica, Nepal and Sri Lanka.

 

Muthoot Finance is one of the best franchises for gold loans in the country, as is evident from its ability to deliver stronger gold loan growth and best-in-class profitability.

 

In the first half (April to September) of the financial year 2025-25 (H1FY25), the company’s standalone loan assets under management  (AUM) reached a historic high of Rs 90,197 crore, driven by a robust 28 per cent year-on-year (YoY) growth in core gold loan portfolio. The standalone profit after tax grew by 18 per cent YoY at Rs 2,330 crore. This half year saw the highest-ever gold loan disbursements to new customers of Rs 10,687 crore to 9.66 lakh customers.

 

In Q2FY25, the company crossed the historic milestone of Rs 1 trillion in consolidated loan AUM. In Q2FY25, it recorded a net profit of Rs 1,321 crore, registering a 21 per cent YoY growth, and its total revenue from operations surged by 36.7 per cent to Rs 4,928.8 crore.

 

Management acknowledged that the competitive aggression from banks in gold loans has reduced. Additionally, lower availability of unsecured credit in the form of personal loans/MFI loans have resulted in stronger demand for gold loans. Management also indicated that some of the Fintechs/ NBFCs have calibrated their lending into unsecured loans. This suggests that the strong gold loan demand could sustain in the near term, according to Motilal Oswal Financial Services.

 

With a favorable demand outlook for gold loans driven by reduced competition from banks and limited availability of unsecured credit, the company is well positioned to maintain its growth momentum. However, we would continue to watch out for any increase in competitive intensity and the impact of any decline in gold prices in H2FY25, the brokerage firm said in Q2 result update.

 

Gold AUM growth remains strong backed by high gold prices and moderating competitive intensity. Further, growth guidance has been revised upwards to 25 per cent vs 15 per cent while need to watch out for higher credit cost as stage III assets have increased in last few quarters, said analyst at IDBI Capital in result update.