Detailed Narrative
Record AUM Growth and Profitability
Muthoot Finance achieved a historic consolidated loan AUM of ₹1,22,000 crores for FY25, marking a substantial 37% year-on-year growth. Consolidated profit after tax also saw a robust increase of 20% to ₹5,352 crores. The standalone gold loan AUM surpassed the ₹1,00,000 crore milestone, reaching ₹1,02,956 crores, with a significant 41% YoY growth of ₹30,000 crores, demonstrating strong performance in its core business.
Dividend Declaration and Credit Ratings
The company declared a final dividend of ₹26 per equity share for the year, representing 260% on the face value. Muthoot Finance also received upgraded long-term issuer credit ratings from S&P Global (BB to BB+ with stable outlook) and Moody's (BA2 to BA1 with stable outlook), reflecting improved financial strength and stability.
Subsidiary Performance Overview
Muthoot Home Finance's loan AUM grew 47% to ₹2,985 crores, with PAT increasing to ₹39 crores. Belstar Finance reported a PAT of ₹46 crores despite a challenging microfinance environment, and Muthoot Money's loan AUM surged 248% to ₹3,903 crores. Muthoot Insurance Brokers contributed ₹166 crores in PAT, while Asia Asset Finance recorded LKR 44 crores in profit after tax.
Asset Quality and Credit Costs
Total impairment for the year stood at ₹766 crores, comprising ₹130 crores in write-offs and approximately ₹630 crores in incremental provisions, primarily due to growth in the gold loan book. Stage-III gold loan assets decreased from ₹3,700+ crores in December to ₹3,347 crores by March. The company auctioned ₹461 crores during the last full year to manage asset quality.
Regulatory Landscape and LTV Concerns
Management discussed the draft gold lending guidelines, noting that new players in the market have attracted regulatory oversight. While acknowledging the positive aspects of harmonizing processes, the company expressed concern that proposed LTV tweaks could disadvantage NBFCs and potentially drive customers back to the unorganized sector. Muthoot Finance has submitted its suggestions to the regulator regarding these guidelines.
Branch Expansion and Operational Efficiency
Muthoot Finance has received approval to open 115 new branches, which will contribute to its growth strategy. Muthoot Money has expanded its branch network to 992, with a gold loan AUM of ₹3,500 crores. The company continues to focus on improving branch performance and customer footfalls through ongoing marketing activities and campaigns, aiming to maintain its customer base and acquire new customers efficiently.
Cost of Funds and Interest Spreads
The company aims to maintain its interest spread in the range of 9% to 10%. Management noted a significant drop in borrowing costs post-March, which is expected to benefit the company unless the trend reverses. They anticipate that a 5-5.5% return on assets will be maintained, with changes in borrowing costs not materially impacting this metric.