Muthoot Finance crashes 14% post Q1; analysts flag margin pressure

Muthoot Finance Q1 results review: Muthoot Finance's share price dropped over 14 per cent after the company reported its Q1FY27 results over the weekend. The NBFC delivered weak performance for the April–June quarter (Q1FY27). The company's earnings came under pressure due to a sharp quarterly decline in net interest margin, analysts noted. 

 

At 11:45 AM, Muthoot Finance's share price was trading 8.95 per cent lower at ₹2,843.90 per share on NSE. In comparison, Nifty 50 was up 0.84 per cent at 24,589.60. In intraday trade, the stock declined 14.26 per cent to touch the day's low at ₹2,671 per share.

 

 

Muthoot Finance Q1 results highlights:

 

• Muthoot Finance reported a 43 per cent increase in its consolidated profit to ₹2,825 crore for the first quarter ended June 2026. The company had posted a profit of ₹1,974 crore in the corresponding quarter of the previous year.
• Total income rose to ₹8,695 crore for the quarter under review from ₹6,485 crore in the April-June quarter of FY26
• Total expenses increased to ₹4,898 crore as against ₹3,812 crore reported in the first quarter of the previous financial year.
• The company's loan assets under management increased 43 per cent to ₹191,532 crore as against ₹1,33,938 crore last year in the same period.

 

Brokerages’ view on Muthoot Finance post Q1 Results

Nirmal Bang | Hold | Target ₹3,000

 

The brokerage noted that the gold loan NBFC reported a weak quarter as margins compressed sharply. Muthoot Finance reported 1QFY27 PAT was materially below the brokerage's estimates, primarily due to a sharp 297 bps Q-o-Q decline in NIM, driven by a 283 bps fall in yield on advances. "The management attributed the yield decline to a combination of lower lending rates and normalization, following exceptionally strong interest recoveries and loan renewals in FY26," Nimal Bang said.

 

Looking ahead, the brokerage said that it expects loan growth to normalise from the exceptionally strong levels witnessed over the past year, when rising gold prices significantly boosted demand. "We expect margins to stabilize around 11 per cent levels broadly, supported by the management's expectation of an 18–18.5 per cent portfolio yield, while asset quality should remain benign and cost discipline is likely to continue," it said.

 

DAM Capital  | Neutral | Target ₹3,200

 

The brokerage noted that the company's gold loan growth was in-line with its expectations but material miss on earnings on the back of sharp fall in yields. 

 

"Tonnage growth still remains weak despite the gold price correction. Albeit, the number of active customers inched up after a couple of quarters of de-growth, which could be on the back of a sharp drop in yields," it added.

 

DAM Capital noted that overall the competitive force this time around is more focused and is here to stay. Newer entrants are more granular in their physical presence, which would drive the shift from unorganised to organised without much pressure on yields. "But players like Muthoot, which is already very big and also concentrated in the south, would tend to lose market share and also yields," the brokerage added.

 

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