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Muthoot Finance Limited — Q3 FY26 earnings call

Call held 12 Feb 2026

Management summary

Muthoot Finance delivered a strong Q3 FY26, driven by robust 50% YoY growth in its core gold loan portfolio and a 91% increase in standalone PAT for the nine months. Subsidiaries like Muthoot Money and Belstar Microfinance also showed significant growth and turnaround, respectively. The company anticipates positive impacts from potential RBI regulatory changes easing branch expansion, although cost of funds remains elevated due to banks' MCLR policies.

Highlights

Standalone AUM achieved historic growth of INR50,000 crores.
Core gold loan portfolio grew by 50% YoY.
Standalone profit after tax for 9 months grew 91% to INR7,048 crores.
Belstar Microfinance achieved a significant turnaround in Q3, posting a profit after tax of INR51 crores.
Muthoot Money's loan portfolio for 9 months increased by 168% to INR8,003 crores, with profit after tax of INR203 crores.
RBI draft regulations may allow branch opening without prior permission, a positive for growth.

Concerns

Opex growth trajectory questioned by analyst (25% vs 13-20% historical), management attributed to salaries, rent, advertising, and consultants.
Cost of funds not significantly decreasing despite rate environment, due to banks not reducing MCLRs.
New customer growth slightly lower this quarter (0.4 million vs 0.42 million last quarter).

Key financials

2 periods

Headline

Standalone AUM (9 months)
₹1.40L Cr
Core Gold Loan Portfolio Growth
50%
YoY +50%
Standalone PAT (9 months)
₹7,048 Cr
YoY +91%
Muthoot Home Loan AUM
₹3,380 Cr
YoY +24%
Muthoot Home Loan Revenue
₹339 Cr
YoY +38%
Muthoot Home Loan PAT (9 months)
₹19 Cr
Belstar Microfinance Loan AUM (9 months)
₹7,911 Cr
Muthoot Money Loan Portfolio (9 months)
₹8,003 Cr
YoY +168%
Muthoot Money PAT (9 months)
₹203 Cr
Accrued Interest Outstanding
₹800 Cr
Average LTV on Outstanding Portfolio
57%

Q3

Belstar Microfinance PAT
₹51 Cr
Interest on Recovery
₹644 Cr

What they filed

Q1 FY27: revenue up 34.4%, net profit up 43.1% against the same quarter last year.

₹ Cr · quarterly

Line item	Q2 FY25	Q3 FY25	Q4 FY25	Q1 FY26	Q2 FY26	Q3 FY26	Q4 FY26	Q1 FY27
Revenue	4,929	5,190	5,622	6,450	7,283 +48%	8,188 +58%	9,289 +65%	8,672 +34%
Expenses	1,324	1,405	1,549	1,422	1,480	1,426	1,528	1,408
Other income	29	32	6	16	50	20	3	23
Interest	1,807	1,900	2,111	2,355	2,571	2,919	3,155	3,458
Depreciation	25	31	35	35	38	40	24	31
Profit before tax	1,802	1,886	1,932	2,654	3,244 +80%	3,822 +103%	4,584 +137%	3,797 +43%
Tax rate	27%	26%	25%	26%	26%	26%	26%	26%
Net profit	1,321	1,392	1,444	1,974	2,412 +83%	2,823 +103%	3,397 +135%	2,825 +43%
EPS	31.67	34.60	36.81	50.22	60.29	69.84	83.43	69.72

How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Guidance & targets

Loan Growth

Overall Loan Growth Loan Growth · Next year · Low confidence Should grow a little more than 36%

I think we have grown by 36%. We should grow a little more. I will be able to give some number tomorrow, sir.

— George Muthoot, Managing Director

Profitability

Net Interest Margins and Spread Profitability · Ongoing · Medium confidence Maintain

There is nothing like a pricing strategy. We try to maintain our net interest margins. So if the cost of funding is low, our yield also would be lower. But we try to maintain our net interest margins and spread.

— George Muthoot, Managing Director

Branch Expansion

Branch Growth Branch Expansion · Ongoing · Medium confidence Calibrated growth

We have to open branches, calibrated growth that we will continue.

— George Muthoot, Managing Director

What to watch in Q4 FY26

Loan Growth Guidance

Soon after this call

Current 36% (9-month growth)

Target Specific number to be provided by MD

Why it matters

Provides clarity on management's outlook for core business expansion and future growth trajectory.

I think we have grown by 36%. We should grow a little more. I will be able to give some number tomorrow, sir.

Risks & concerns

Gold price volatility impacting AUM growth
medium

Management stated AUM growth is demand-driven, not price-driven, and highlighted safeguards like low LTV (57%), making charges (15-20%), and sentimental value of gold ornaments.

Analyst downplayed
Competition from banks and other NBFCs
low

Management acknowledged competition but expressed confidence in their continued growth, citing their 50% growth despite the competitive landscape.

Analyst acknowledged
Microfinance sector bouncing back impacting gold loan demand
low

Management believes the microfinance sector's bounce back is not significantly impacting gold loan demand, as unsecured lending remains difficult to obtain for many customers.

Analyst downplayed

Q&A highlights

7 direct

Yields and interest on recovery components Direct

The interest which we earned on the legacy NPA minus the interest on the derecognized NPA, it comes to about INR 500 crores, which is the old NPA we have received. And also, we had some auctions during the quarter, and we realized about INR120 crores through auctions also. ARC also contributed to about INR24 crores of interest. So that is why there is a bump in the interest.

Clarified the specific components (legacy NPA recovery, auctions, ARC) contributing to the reported bump in interest income and rising yields.

Asked by Maruk Adajania

Sustainability of one-off interest income from NPA recoveries Direct

So when there is an increase in the NPA, certainly, there is an interest derecognition happens. And those loans remain for some time in our books, interest accrues. And when it is collected, the entire amount is getting recognized. So that is a regular process because there is no significant decrease in the old NPA accounts, there's a jump. This is not a regular affair. But whenever it happens, there will be an additional income recognition which happens.

Explained that while NPA recovery is a regular process, the large 'jump' in interest income from it is not a regular affair, implying future quarters might not see similar large one-offs.

Asked by Shreepal Doshi

Cost of funds trajectory and MCLR reduction by banks Direct

So Shreepal, see, in case of banks, we are not seeing much of a decrease in their MCLR and especially whereas in the bonds, we have seen a decrease and especially the last couple of months, there has been interest rates have been volatile. It has been going up and down. So that creates a cost environment for in terms of interest spot. And especially it is because the banks have not significantly reduced their MCLRs.

Clarified that the cost of funds has not significantly decreased because banks have not fully passed on RBI rate reductions through MCLRs, impacting the company's NIM.

Asked by Piran Engineer

Opex growth trajectory (25% vs historical 13-20%) Direct

I don't know the exact number of growths. Salaries are going up, rents are going up. All costs are going up. Inflation is there. So we are not insulated from all these things. ... And one item where we spent more is on the advertisements, that's being a large volume business, our advertising budget has been keep on increasing. And of course, we take some outside help in terms of consultants.

Provided reasons for the higher operating expense growth, attributing it to inflation, rising salaries, rent, increased advertising, and consulting fees.

Asked by Piran Engineer

Impact of gold price volatility on AUM growth and safeguards Direct

Our AUM growth is not based on the price of gold. AUM growth is based on the demand for gold. ... Today, our average loan-to-value is only 57% or lesser than 57%. So we have such a big margin that, that is one side of the price. But again, most importantly, we finance only gold ornaments on which there is a making charge, which is again a 15%, 20%. So the replacement cost for a customer is not 100%, it is 115 to 120. So we have sufficient margin.

Management reiterated that AUM growth is demand-driven and highlighted strong safeguards (low LTV, making charges, sentimental value) against gold price drops.

Asked by Vasudha Khurana

Branch expansion strategy post RBI draft regulations Direct

So hopefully, these draft regulations will be made into proper regulations and the impact to Muthoot Finance and also to Muthoot Money, which has about 1,000 branches today would be that they would be able to open branches wherever we require. And that is certainly a very positive attitude, which is being shown by the Reserve Bank of India. ... We have to open branches, calibrated growth that we will continue.

Discussed the positive implications of potential RBI policy changes allowing easier branch expansion, but emphasized a calibrated growth approach rather than aggressive, rapid expansion.

Asked by Shreepal Doshi

Shareholder returns (stock split, bonus shares) Direct

Splitting shares and bonus shares is something again, which we will, since you said, we will take it up in the next meeting and ask the Board their opinion on that.

Indicated that the company would consider stock split and bonus shares, a positive for retail investors, and would discuss it in the next Board meeting.

Asked by Sanjay

2 min read 7 chapters

Detailed narrative

Q3 FY26 Performance Highlights

Muthoot Finance reported a strong Q3 FY26, with standalone AUM achieving a historic growth of INR50,000 crores, and the core gold loan portfolio growing robustly by 50% year-on-year. The standalone profit after tax for the nine months ended December 31, 2025, surged by 91% to INR7,048 crores. This performance was attributed to accelerated demand for gold loans, especially during the festive season, reinforcing the company's market position.

Gold Loan Business Drivers and Safeguards

Management emphasized that AUM growth is primarily driven by demand for gold loans, not solely by gold price increases. The average loan-to-value (LTV) on the outstanding portfolio is a conservative 57% at current gold prices, well below the regulatory limit of 75%. This, coupled with financing gold ornaments that include a 15-20% making charge, provides significant safeguards against potential gold price volatility, ensuring asset quality.

Subsidiary Performance Overview

Muthoot Home Loan's AUM grew 24% YoY to INR3,380 crores, with revenue at INR339 crores and PAT of INR19 crores for 9 months. Belstar Microfinance saw a significant turnaround in Q3, posting a PAT of INR51 crores, reducing its cumulative loss to INR109 crores, with its loan AUM at INR7,911 crores. Muthoot Money, a wholly-owned subsidiary, showed exceptional growth, with its loan portfolio increasing by 168% to INR8,003 crores and PAT reaching INR203 crores for the 9-month period, highlighting diversified growth.

Regulatory Environment and Branch Expansion

The company noted positive draft regulations from the RBI that could allow branch openings without prior permission, a long-standing request. This is seen as a very positive step, indicating regulatory support for the gold loan business. Muthoot Finance plans to continue with calibrated branch growth, leveraging this potential regulatory easing to strategically expand its reach and capitalize on market opportunities.

Yields, NPAs, and Interest Income

The company's yields have been rising, partly due to a significant recovery of legacy NPAs. In Q3, approximately INR500 crores of interest was earned from old NPA recoveries, supplemented by INR120 crores from auctions and INR24 crores from ARC sales, totaling INR644 crores. While new NPAs amounted to INR342 crores, the net NPA reduction was INR556 crores, and accrued interest outstanding stood at over INR800 crores, indicating effective asset quality management.

Cost of Funds and Operating Expenses

Management indicated that the cost of funds has not seen significant reductions, as banks have not fully passed on RBI's rate cuts through MCLRs, leading to volatile interest rates. Operating expenses grew by 25%, attributed to rising salaries, rent, increased advertising budget for volume business, and consulting fees, reflecting inflationary pressures and investments in growth.

Shareholder Returns and Future Outlook

An analyst raised questions regarding shareholder returns, specifically suggesting stock splits and bonus shares. Management confirmed that these options would be discussed in the upcoming Board meeting, signaling responsiveness to investor feedback. The overall outlook for the gold loan business remains positive, with strong momentum and opportunities in the sector, supported by increasing customer acceptance as a convenient and trusted credit solution.

This is an AI-generated summary of a publicly available earnings call transcript.

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