Muthoot Finance rallies 4%, hits all-time high; market cap nears Rs 1 trn

Muthoot Finance is trading higher for the 3rd straight day, surging 10% after S&P Global Ratings upgraded the Long Term issuer rating of the company to 'BB+/B' from 'BB/B' with a stable outlook.

Shares of Muthoot Finance hit an all-time high of Rs 2,419, as they rallied 4 per cent on the BSE in Wednesday’s intra-day trade amid heavy volumes. The stock of the non banking finance company (NBFC) has surpassed its previous high of Rs 2,335 touched on February 13, 2025.

 

Muthoot Finance is trading higher for the third straight day, surging 10 per cent during the period after S&P Global Ratings upgraded the Long Term issuer rating of Muthoot Finance to ‘BB+/B’ from ‘BB/B’ with stable outlook.

 

The up move in the stock price of the company has seen Muthoot Finance's market capitalisation inche towards Rs 1 trillion. At 11:00 AM; Muthoot Finance’s market capitalisation stood at Rs 96,909 crore on the BSE, the exchange data shows.

 

 

Muthoot Finance is one of the largest players in the gold loan market, focusing on loans against gold jewelry, although it is relatively small within the overall financial sector in India.  ALSO READ | Stock Market LIVE Updates: Sensex, Nifty rangebound; SMIDs gain 1%; PSB, Metal, Realty gain; IT down

 

S&P Global Ratings said that the ratings upgrade reflects its view that the company will maintain its excellent capital and earnings over the next 12 months while benefiting from the strengthening regulatory environment, particularly for upper-layer fincos in India. 

 

“We expect some stress in the asset quality of Muthoot's microfinance subsidiary, in line with the industry. That said, we expect the company to maintain overall asset quality, thanks to the dominance of its highly collateralised gold loan portfolio,” the ratings agency said in rationale.

 

S&P Global Ratings expect Muthoot Finance to maintain its strong market position despite increasing competition. Muthoot benefits from strong brand recognition and a proven track record in gold loans. While banks have become aggressive in this lucrative segment, the rating agency believes Muthoot will retain its market position due to its extensive experience and expertise in this niche.  ALSO READ | Here's why Zydus Lifesciences share price popped 3% in trade on March 19

 

Meanwhile, in another development, Muthoot Finance disclosed that its assets under management (AUM) for gold loans topped Rs 1 trillion as of March 14, owing to strong demand for gold loans amid a slowdown in credit availability from other sources.

 

The brokerage firm Geojit Financial Services anticipates continued outperformance in the gold loan segment in the near-term. The expansion of gold loans through the subsidiary, Muthoot Money, combined with elevated gold prices and a slowdown in unsecured lending options, is expected to support growth. In the December quarter (Q3FY25), credit costs have increased by 23 bps year-on-year, primarily due to substantial provisions resulting from a less aggressive auction policy. With rising gold prices, asset quality risks remain limited, the brokerage firm said in the result update.  ALSO READ | KPI Green Energy gains on Rs 272 crore funding for Gujarat power projects

 

Muthoot Finance is in a sweet spot with strong tailwinds underpinned by continued gold price traction, full adherence to regulatory norms and risk aversion to unsecured loans propelling gold loan demand, said analysts at Elara Capital. Favorable market positioning underpinned by subsiding competition and conformation with regulatory norms coupled with underlying sustained asset price momentum continue to aid earnings, the brokerage firm said.