Muthoot Finance Q4 FY26 earnings call

Muthoot Finance reported its highest ever consolidated gold loan AUM of INR 1,65,000 crores, marking a significant 54% year-on-year growth. The total consolidated AUM, including subsidiaries, reached INR 1,81,916 crores, growing 49% YoY. This strong asset base translated into a near doubling of consolidated Profit After Tax (PAT) to INR 10,607 crores, up 98% YoY, with standalone PAT also increasing 95% to INR 10,134 crores.

Subsidiaries demonstrated stable and robust performance, contributing significantly to the overall results. Belstar Microfinance saw disbursements increase to INR 7,500 crores from INR 6,000 crores, with collection efficiency improving to 99.85%. Muthoot Home Finance's AUM grew 17% to INR 3,485 crores, achieving a PAT of INR 45 crores. Notably, Muthoot Money, transitioning to gold loans, reported a 151% growth in gold loan AUM to INR 9,794 crores and a substantial PAT of INR 338 crores, up from INR 12 crores last year, supported by a INR 1,000 crore capital infusion from the parent.

The company declared a dividend of 300% or INR 30 per share, marking its 14th consecutive year of consistent dividend payouts since its 2011 IPO. For the upcoming year, Muthoot Finance plans to open 200-300 new branches, building on the 177 branches opened last year by the group. Belstar Microfinance is also targeting approximately 200 new gold loan branches, expanding its gold loan footprint.

While Stage 2 and Stage 3 NPAs increased in absolute terms, management clarified this was primarily due to the RBI's new borrower-wise classification, shifting from a loan-level approach. Percentage-wise, the NPA stood at 2.34%, which is lower than 3.35% in March 2025. Management assured that the LTV on Stage 3 NPAs, including interest and principal, remains high at 57-58%, indicating strong recoverability, as these loans are considered 'in the money' and 100% recoverable.

The company observed a yield increase of 0.5% to 1% on certain loan types in the last quarter, contributing to the reported yield of 20.76%. Management noted that borrowing costs are expected to rise, suggesting a focus on maintaining current yield levels rather than reducing them to gain market share. Despite new AAA-rated NBFCs entering the gold loan sector, Muthoot Finance views them as opportunistic rather than focused players, emphasizing the operational challenges of the business and its own sustained growth.

Muthoot Finance experienced a 2% degrowth in its customer base, primarily due to churn in smaller ticket size loan segments (0-30,000 crores). However, the company reported growth in higher ticket size segments (50,000, 1 lakh, 2 lakhs), leading to an increase in the average ticket size, which has grown from INR 15,000 five years ago to INR 1.3 lakhs today. This shift reflects a natural evolution in a mature portfolio, with customers taking larger loans due to increased gold prices and working capital needs.

Management expressed a positive view on RBI's new LTV framework, which allows for greater flexibility in offering LTVs up to 85% (for loans up to INR 2.5 lakhs). This enables the company to introduce more tailored loan products. While the software and processes for implementing these diverse LTV offerings are currently under development, Muthoot Finance affirmed its long-standing practice of maintaining LTVs within RBI-regulated limits, with the average LTV in its book currently at 57%.