Muthoot Finance Sees Gold Price Surge As Key Growth Driver For FY26

Muthoot Finance Ltd. is set for another strong year of expansion, with its gold loan book crossing Rs 1 lakh crore in fiscal year 2025. Speaking to NDTV Profit, the company's managing director George Alexander highlighted the 40% rise in gold prices over the past year as a key growth driver for the company and the segment overall, increasing both loan disbursements and customer participation.

"With the price hike, customers now need to bring in less gold for the same loan amount. Those looking for maximum borrowing can get more against their existing collateral," Alexander explained.

However, despite the rising valuation of pledged gold, Muthoot's average loan-to-value ratio remains at 62%, well below the 75% regulatory cap set by the Reserve Bank of India, he mentioned

Commenting on Bain Capital's recent investment in Manappuram Finance, George Alexander said while competition in the gold loan segment is heating up, Muthoot Finance remains confident in its market position.

"Gold loans are built on trust. Customers need confidence in the lender before parting with their ornaments. Our 5,000+ branches and longstanding reputation give us a competitive edge," Alexander asserted. He emphasised that the rising demand for gold loans ensures ample market share for all players, positioning Muthoot Finance for continued expansion.

Despite interest from private equity players, Muthoot Finance sees no immediate need for external capital. With a capital adequacy ratio of nearly 30%—double the regulatory requirement of 15%—and a low leverage ratio of just three times, the company is well-capitalised for future growth, the top executive said.

"Today, our capital adequacy is more than 27%, almost touching 30%, while the regulatory norm is only 15%. So capital is not an issue for us at all. Our leverage is just three times, and we are generating good profits, which are reinvested into the company,” he said.

When asked about growth prospects in the new fiscal, Alexander said he remains optimistic about fiscal 2026. He mentioned that while the company has traditionally given a conservative 15% annual growth guidance, it has historically delivered 20-25% growth and has already achieved 40% growth in fiscal 2025. "If things continue on this trajectory, FY26 could also be a year of strong expansion," he noted, reinforcing Muthoot Finance's position as a dominant player in the gold loan market.

Shares of Muthoot Finance closed Thursday's session 1.17% higher at Rs 2,370.15 apiece on the NSE in comparison to benchmark Nifty 50's decline of 0.35%.