Muthoot Finance shares zooms in 8% on Q2 profit growth, AUM crosses Rs 1 lakh crore milestone

Shares of Muthoot Finance, India’s largest gold financier, rallied 8 percent on November 18 following strong quarterly results and a significant milestone in assets under management (AUM). 

The company’s AUM soared by 31 percent year-on-year (YoY), hitting Rs 1.04 lakh crore on a consolidated basis. Gold loan AUM, which makes up a major chunk, reached a record high of Rs 86,164 crore, driven by robust collections.

Muthoot’s quarterly net profit jumped 26 percent YoY to Rs 1,250 crore, supported by a 35 percent rise in total revenue to Rs 4,120 crore. The demand for gold loans surged as the Reserve Bank of India (RBI) tightened regulations on unsecured lending, steering borrowers towards secured credit options.

Brokerages remain optimistic about Muthoot Finance's future growth. Bernstein maintained its "Outperform" rating with a price target of Rs 2,000, citing strong operational metrics. Meanwhile, Morgan Stanley upgraded the stock from "Underweight" to "Equal weight," acknowledging improved sector dynamics, but noted some persisting sectoral concerns.

The lender also announced an additional Rs 500 crore equity infusion into its subsidiary, Muthoot Money, aimed at bolstering its capital adequacy ratio.

Muthoot Finance's stock has recovered a large part of its losses from earlier in November and is up by 31 percent year-to-date. Rural India remains a key growth driver, contributing nearly two-thirds of the gold stock held at Muthoot’s extensive branch network.

The stock’s surge comes amid positive sentiment driven by strong financial performance and strategic shifts in the lending environment.