Q1 profit rose 65% YoY to ₹1,974 crore; AUM grew 37% to ₹1.34 lakh crore, with asset quality improving.
Morgan Stanley upgraded to overweight; Jefferies and Nuvama raised targets to ₹2,950 and ₹2,993, citing strong earnings and growth.
Motilal Oswal stayed neutral, saying valuations factor in much of the upside.
Shares of Muthoot Finance surged as much as 10% on August 14 after the gold loan financier delivered a solid first-quarter performance, sparking a wave of target price hikes from brokerages. The rally pushed the stock to a record high of ₹2,799, with investors betting that robust earnings momentum and steady asset quality will sustain in coming quarters.
The lender’s consolidated net profit jumped 65% year-on-year to ₹1,974 crore for the June quarter, outpacing analyst estimates. Loan assets under management rose 37% to ₹1.34 lakh crore, led by a 40% jump in gold loan AUM to ₹1.13 lakh crore. Asset quality also improved sharply, with gross Stage 3 assets falling to 2.58% from 3.41% in the March quarter and net Stage 3 assets dropping to 2.1% from 2.79%.
Chairman George Jacob Muthoot attributed the performance to strong disbursements and operational efficiency, stating that gold loans continue to serve as a critical source of affordable, quick-turnaround credit for households and small businesses. Managing Director George Alexander Muthoot pointed to the firm’s digital push and favourable regulatory shifts as levers for sustained growth.
In response to the stellar earnings, global brokerage Morgan Stanley upgraded Muthoot to ‘overweight’ from ‘equalweight’ and lifted its price target marginally to ₹2,920. Alongside that, Morgan Stanley highlighted the company’s industry-leading return on equity, low asset-quality risks, and resilient margins.
Jefferies retained a ‘buy’ call but lifted its price target for Muthoot Finance by 11% to ₹2,950, citing expectations of 23% annualised profit growth between FY26 and FY28 and positioning it as a defensive bet amid broader market volatility.
Following the trend, Nuvama Institutional Equities touted Muthoot’s results as an “all-round beat” and raised its target by 14% to ₹2,993, highlighting the company’s stronger earnings trajectory versus peers and its ability to maintain high yields.
Motilal Oswal, however, struck a more cautious tone, maintaining a ‘neutral’ rating with a ₹2,790 target, arguing that the stock’s current valuation already reflects much of the growth story.
With gold prices steady and rural credit demand buoyant, analysts say Muthoot is positioned to ride the dual tailwinds of economic recovery and shifting household savings preferences toward collateralised lending.
