Muthoot Finance Shares Hit Life High After Q2 Profit Nearly Doubles

Muthoot Finance shares surged almost 10% on Friday after the lender's standalone net profit nearly doubles year-on-year. Additionally, the sharp jump in earnings, powered by robust growth in the gold loan portfolio and expanding margins, has prompted major brokerages to lift their price targets and reiterate bullish views.

The company posted a bottom line of Rs 2,345 crore in the September quarter as compared to Rs 1,251 crore in the year-ago period, according to an exchange filing on Thursday. The net interest income jumped 59% to Rs 3,992 crore from Rs 2,519 crore in the same quarter last fiscal.

The company has sharply raised its gold loan growth guidance to 30–35% for fiscal 2026, up from 15% previously guided during the fourth quarter of the previous fiscal. Asset quality also continued to improve during the quarter.

Management attributed the strong gold loan growth outlook to favourable Reserve Bank of India norms, higher gold prices, and a tightening environment for unsecured credit, which is pushing demand towards secured lending. The customer base is expanding rapidly, with 4.2 lakh new customers being added each quarter.

The company plans to add 100–200 branches annually to accommodate growth. Average loan-to-value (LTV) stands at 57%, lower due to rising gold prices, while the share of non-gold loans is expected to remain stable at 12–15% of total AUM.

Bernstein maintained its Outperform rating and raised its price target to Rs 3,400 from Rs 2,700, noting that Q2 marked “another strong quarter” for the company.

The firm highlighted sustained asset under management (AUM) growth, further expansion in net interest margin (NIM) driven by higher recoveries and return on equity exceeding 30% alongside earnings per share growth of 87%.

CLSA also increased its price target to Rs 4,000 from Rs 3,600, calling the quarter a “master blaster”. The brokerage pointed to strong momentum across all operating metrics, aided by rising gold prices that supported non-performing asset (NPA) recoveries. Margins, it said, remain healthy and well supported by the favourable pricing environment.

The scrip rose as much as 9.89% to Rs 3,728.80 apiece on Friday. It pared gains to trade 9.63% higher at Rs 3,720 apiece, as of 9:40 a.m. This compares to a 0.14% decline in the NSE Nifty 50 Index.

It has risen 108.80% in the last 12 months and 73.35% year-to-date. Total traded volume so far in the day stood at 0.52 times its 30-day average. The relative strength index was at 67.40.

Out of 25 analysts tracking the company, 16 maintain a 'buy' rating, five recommend a 'hold,' and four suggest 'sell,' according to Bloomberg data. The average 12-month consensus price target of Rs 3,375.23 implies a downside of 8.9%.