- Muthoot Microfin forecasts strong growth for fiscal year ending March 2026
- Loan delinquency peak is over, enabling operational expansion opportunities
- Projected 20% AUM growth and 28% rise in disbursements last quarter reported
Muthoot Microfin Ltd. a major Indian microfinance institution focusing on microloans for female customers in rural regions, is forecasting good times ahead, as sector headwinds slowly start to fade out, according to the company's CEO, Sadaf Sayeed.
Muthoot Microfin expects strong growth for the current fiscal ending March 2026, especially having already navigated a period of industry-wide stress. He confirmed that the peak of loan delinquency and over-leveraging concerns are in the past, and therefore, entity such as Muthoot Microfin, could be set for significant operational expansion.
MML is a subsidiary of the Muthoot Group and the second largest NBFC-MFI in South India, is projecting 20% AUM growth for the fiscal year, signaling a rebound that significantly exceeds its initial guidance.
This optimism follows a notable 28% jump in disbursements last quarter. “Most concerns in MFI segment behind us. Peak of the delinquency has played out,” Sayeed said.
The growth is fueled by a dual strategy: retaining its existing Joint Liability Group (JLG) customer base, which is expected to grow 10%, and a strategic push for product diversification into individual loans and gold finance.
Sayeed reported promising early results in these new segments, particularly individual loans, which have shown "zero delinquency so far."
Sayeed further noted that Net Interest Margins (NIMs) are improving due to a falling cost of funds, now at 10.6%, alongside an improving portfolio yield.
MML is on track to hit NIMs at the high end of its 12.7% guidance and targets a Return on Assets (ROA) of 2% for the year. Furthermore, the company is confident in driving credit costs down significantly next year to between 2.25% and 2.5% in FY27.
Muthoot Microfin is the largest such lender in Kerala and holds a 16% market share in Tamil Nadu.
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