The international gold price has dipped below $4,000 an ounce in the spot market, its lowest level in seven months.
Here’s how falling gold prices is impacting financiers:
Muthoot Finance
Muthoot is a pure-play gold loan lender and a direct beneficiary of gold prices. Gold loans constitute almost the entire loan book for the company. The stock is down 2% in today’s session, and is down 9% in the last one month.
Manappuram Finance
Gold loans account for roughly half of its consolidated assets under management (AUM). Gold remains the largest segment, despite its diversification. Shares are also down 2% on Thursday, and have turned negative for the year, having declined 5% over the last one month.
Muthoot Finance and Manappuram Finance are under pressure despite strong collateral buffers. Their managements have repeatedly said moderate gold price corrections do not materially impact their asset quality. The key concern is growth, not credit risk. Their recent over 50% gold loan growth was aided by rising gold prices and higher borrowing eligibility.
IIFL Finance
Gold loans now contribute around 20% of its assets under management. The stock is down around 2% as well, taking its losses for 2026 to 17%.
CSB Bank
It is one of the most gold-focused banks. Gold loans contribute around 42% – 45% of its total advances. The stock is down 5.2% on Thursday, extending their year-to-date losses to 33%.
Where Are Shares Of Gold Financiers Headed?
According to brokerage firm Investec, the sharp run-up in gold prices, constrained supply in unsecured lending were tailwinds for the gold finance segment in the financial year 2026. Gold is now India’s second-largest retail loan segment behind only mortgages.
Muthoot Finance delivered 30% return on equity in FY26. The company is now heading into a much tougher cycle — competitive intensity is at unprecedented levels, unsecured loan growth is rebounding, the brokerage added.
Last week, Mukul Kochhar, the head of equities at Investec Capital Services (India), had told CNBC-TV18 that a lot of the gold financing companies’ growth actually comes from the price of gold. He is of the view that central bank buying has contributed to the gold run up in the past few years, in addition to lack of confidence in reserve currencies. He said while one cannot predict gold prices, there is a link between gold price performance to some of the gold financiers’ performance, as the number of people borrowing has not grown, but the loan growth has come from the metal’s price.
On June 18, Viral Shah, the senior VP at IIFL Capital, also told CNBC-TV18 that 70% to 80% of the moves for gold financiers are determined by just gold prices. The volume growth is barely 2%-3% at best, he said. “What we have been telling and advocating to clients is for pure play gold financiers, the base case of say gold price not rising is a negative outcome now because you have competition coming in from many of the other larger NBFCs. Having said that, if the gold price moves up by, say, another 10% that doesn’t matter for now. It may be a year or two years down the line,” he said, reiterating that the key determinant is going to be the gold price, and where it heads in that direction.
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