Muthoot, Manappuram can rally more despite up to 55% rise in 2025: Analysts

Shares of Muthoot Finance have surged 37.7 per cent so far in CY-25, while that of Manappuram Finance have rallied 54.6 per cent. Gold has surged 42 per cent in 2025

The double-digit rally in gold finance stocks — up to 55 per cent so far in calendar year (CY) 2025 — may still have legs, analysts believe.

 

They suggest investors can consider adding shares of companies like Muthoot Finance and Manappuram Finance at current levels, banking on the likelihood that gold prices will sustain their upward trend.

 

“Even though gold finance companies’ stocks have seen a meaningful run-up over the past few months, there is still some upside left, as neither gold prices nor market sentiment are expected to reverse anytime soon,” said independent market analyst Deepak Jasani.

 

On the bourses, Muthoot shares have gained 37.7 per cent in CY 2025 (until September 9), while Manappuram has jumped 54.6 per cent, according to Ace Equity data. IIFL Finance has risen 6.7 per cent during the same period. By comparison, the benchmark BSE Sensex has returned just 3.8 per cent.

 

In 2025–26 (FY26), these stocks have climbed between 23.5 per cent and 34.7 per cent, against a 4.8 per cent rise in the benchmark.

 

Markedly, the rally in financiers’ stocks coincides with the surge in gold prices this year, as high gold prices directly strengthen the growth outlook for gold lenders.

 

MCX Gold Futures — a key gauge of domestic gold prices — hit a record high of ₹1,09,500 per 10 grams on September 9, having soared about 42 per cent in CY 2025.

 

Since financiers lend against pledged gold, higher prices translate into higher loan-to-value (LTV) potential. Put simply, the higher the gold price, the larger the loan they can extend for the same collateral.

 

Gold lenders also hold substantial pledged gold as inventory, which can be liquidated through auctions in case of loan defaults. When gold prices are high, the realised value from such auctions is higher, lifting lenders’ returns.

 

“Gold has staged an impressive rally in CY 2025, driven by geopolitical and diplomatic risks. There could be some near-term consolidation that affects related stocks. But the long-term trend is intact, keeping gold financiers in a sweet spot,” said Gaurang Shah, head investment strategist at Geojit Financial Services, who has a ‘buy’ call on Muthoot and Manappuram.

 

Rahul Kalantri, vice-president for commodities at Mehta Equities, sees near-term support for gold at ₹1,08,040–1,07,640, with resistance at ₹1,08,950–1,09,450.

 

Apurva Sheth, head of market perspectives and research at Samco, expects gold prices to reach the ₹1,40,000–1,45,000 range in the coming months if macro conditions remain steady.

 

Regulatory tailwinds

 

Beyond rising gold prices, financiers got a boost in June when the Reserve Bank of India (RBI) raised the LTV ratio for gold-backed loans: up to 85 per cent for loans below ₹2.5 lakh and 80 per cent for loans between ₹2.5 lakh and ₹5 lakh. The 75 per cent cap remains for loans above ₹5 lakh.

 

The changes take effect in March 2026. Analysts say this could drive higher loan volumes from the next financial year and pave the way for more product flexibility.

 

On the financial front, Muthoot’s gold loan assets under management (AUM), which account for over 70 per cent of its total AUM, rose 10 per cent quarter-on-quarter (Q-o-Q) and 40 per cent year-on-year (Y-o-Y) in the first quarter (Q1) of FY26. It auctioned ₹13 crore worth of gold in Q1, compared to ₹80 crore in the fourth quarter of 2024-25. Its gold loan non-performing assets also fell by ₹700 crore Q-o-Q, largely due to customer redemptions rather than auctions.

 

Manappuram posted 13 per cent Q-o-Q and 22 per cent Y-o-Y growth in gold AUM for the quarter.

 

Analysts at Nuvama Institutional Equities reiterated a ‘buy’ on Muthoot after Q1 results, with a higher target price of ₹2,993, citing earnings “substantially better than peers”. Motilal Oswal Financial Services pegs Manappuram’s 12-month target at ₹280.