NBFC Stock: Muthoot Finance delivered a strong quarterly performance in Q4FY26, with gold loans continuing to be the primary engine of growth, driving both earnings and balance sheet expansion. The company reported a sharp rise in gold loan assets under management (AUM), which jumped nearly 54 per cent year-on-year to Rs 1.54 lakh crore.
The surge in gold loan growth translated into robust financial performance. Total AUM rose to Rs 1.63 lakh crore, marking a 50 per cent jump from the year-ago period, while net interest income (NII) climbed nearly 79 per cent YoY to Rs 5,194 crore. Profit after tax more than doubled to Rs 3,086 crore.
A key driver behind this performance was the significant rise in gold prices, which boosted the underlying value of collateral. The rally in gold, supported by global uncertainty, expectations of lower interest rates and safe-haven demand, lifted lending volumes in value terms even as physical gold tonnage declined.
The company’s gold holdings fell about 4 per cent sequentially to 196 tonnes, indicating that growth was largely price-led rather than volume-driven.
Alongside rising gold prices, improving demand conditions also supported disbursals. Limited availability of unsecured credit in certain segments pushed borrowers toward gold-backed loans, strengthening demand across geographies. The average ticket size increased to Rs 1.49 lakh, while loan-to-value (LTV) ratios rose to around 58.5 per cent, reflecting the higher valuation of pledged gold.
Margins also saw a notable expansion during the quarter. The company’s yield on gold loans improved, leading to a widening in spreads by nearly 60 basis points quarter-on-quarter to 12.5 per cent. Net interest margins rose to 13.38 per cent, supported by higher lending rates across select schemes and relatively stable funding costs.
The company remains optimistic about the outlook for the gold loan segment, even as competition intensifies with increased participation from banks and new entrants. Management has guided for around 15 per cent growth in gold AUM in the near term and plans to open nearly 200 new branches each in its core business and subsidiary operations.
That said, some analysts caution that the pace of AUM growth may not be fully reflective of underlying demand strength. With gold prices rising sharply, up roughly 65 per cent year-on-year, there is a risk that any correction in prices could impact collateral values and LTV ratios. This, in turn, could influence future disbursements and asset quality trends.
Muthoot Finance’s stock has rallied over 210 per cent in the past three years, while generating gains of nearly 184 per cent over five years. Over a longer horizon, it has surged an impressive 1,467 per cent in the last decade.
(Disclaimer: The above article is meant for informational purposes only, and should not be considered as any investment advice. ET NOW DIGITAL suggests its readers/audience to consult their financial advisors before making any money related decisions.)
