Muthoot Finance Shares Tank 5% As Future Growth Concerns Outweigh Solid Q4

Shares of Muthoot Finance dropped 5% in early trade on May 15 as concerns over the company’s growth prospects in the face of the Reserve Bank of India’s latest guidelines for gold-secured loans, outweighed the stellar Q4 numbers.

During its post-earnings call, Muthoot Finance flagged concerns that the RBI’s proposed regulations on gold-backed loans could push borrowers back towards unregulated lending channels.

The gold loan financier pointed to the central bank’s draft guidelines, in particular, the proposal to enforce a consistent loan-to-value (LTV) ratio of 75% throughout the loan tenure, as a potential deterrent for borrowers seeking financing through formal institutions.

Last month, the RBI recommended stricter norms for gold-backed lending, focusing on more robust underwriting standards, better collateral management, and closer scrutiny of how funds are ultimately used.

Industry analysts have cautioned that applying the LTV cap across the entire loan term, rather than just at origination, could reduce the product’s overall appeal and flexibility.

“Over the past two to three decades, non-banking financial companies have made significant strides in shifting customers from informal moneylenders to the formal lending ecosystem,” said George Muthoot, Managing Director of Muthoot Finance said in the post earnings call.

“But if NBFCs are constrained by the proposed changes to the LTV framework, we risk seeing a reversal of that progress, with borrowers potentially turning back to unregulated sources for credit,” he added.

That aside, the company delivered a 22% on year spike in its consolidated net profit to Rs 1,444 crore, higher than the Rs 1,182 crore that it reported in the year ago period. With that, the company also clocked its higher ever standalone profit for the full fiscal at Rs 5,201 crore, up 28% over the base year.

Muthoot Finance also reported a sharp increase in its consolidated gross loan assets under management (AUM) for the fourth quarter of FY25, coming at Rs 1,22,181 crore, reflecting a 37% rise from Rs 89,079 crore in the same period last year. This marks the company's highest-ever consolidated loan AUM .

On a standalone basis, the company's loan AUM crossed the Rs 1 lakh crore threshold, standing Rs 1,08,648 crore, a 43% year-on-year growth. Similarly, the gold loan AUM also surpassed Rs 1 lakh crore, growing by 41% to Rs 1,02,956 crore .