MUTHOOTFIN - MUTHOOT FINANCE LIMITED Share Price

In the Q1 FY '26 earnings conference call held on August 13, 2025, Muthoot Finance management provided an optimistic outlook for the company's performance. Notably, the stand-alone loan assets under management (AUM) reached a record INR 1,20,031 crores, marking a robust 40% year-on-year growth in gold loans, which totaled INR 32,272 crores with a 10% quarter-on-quarter increase.

Key highlights from management's outlook include:

1. Profit Growth: The stand-alone profit after tax surged by 90% to INR 2,046 crores for the quarter.

2. Digital Transformation: The company is prioritizing efforts to digitally enable its offerings, aiming to enhance customer experience and streamline credit access.

3. RBI Guidelines Impact: Recent RBI guidelines on gold loans are anticipated to bring greater transparency and simplify lending processes, providing a favorable environment for sustained growth.

4. Market Capitalization: The company's market capitalization has surpassed INR 1 trillion, supported by the successful opening of 22 new branches.

5. Subsidiary Performance: Belstar Microfinance has expanded its gold loan branches to 10, achieving a consistent Stage 3 loan asset ratio of 4.4%. Muthoot Home Finance also reported a 41% year-on-year growth in AUM, reaching INR 3,096 crores.

6. NPA Management: Muthoot Money reported a loan AUM of INR 5,000 crores, a staggering 202% year-on-year growth, despite a GNPA increase to 0.96 in Q1.

7. Customer Engagement: Management emphasized increasing new customer engagement, reporting a sequential growth in the number of active customers.

Overall, the outlook is firmly positive, with management expressing confidence in continuing robust growth throughout FY '25-'26 and beyond, driven by strategic initiatives and favorable market conditions.

Q: This quarter, the yields have expanded by 100 basis points sequentially. Was there any booking of income in the interest income line related to NPA recovery, if yes, how much?

A: Yes, our yield increased to 19.56% from the usual 18.5%. We had an INR700 crores NPA reduction, with INR300 crores recognized in interest income from recoveries. Additionally, we received INR100 crores from the ARC, totaling INR400 crores in extra interest received, contributing to the 100 basis points increase in yield.

Q: Can you provide guidance on customer addition given the sequential addition is down to 1.4%?

A: The new customer addition has actually improved to 4.24 lakhs this quarter, from 4.1 lakhs last quarter. While net customer growth may appear lower, overall, we are attracting more new customers even as some existing ones leave.

Q: What is your view on competition and rate cuts in the gold loan sector?

A: The market for gold loans is competitive, and various players are adjusting strategies. However, Muthoot's long-standing presence allows us to maintain our own strategic path without reacting impulsively to smaller market changes.

Q: Regarding the recent guidelines on gold loans, how do you expect this to affect LTV and ticket sizes?

A: The new regulations are favorable, allowing LTV for loans up to INR2.5 lakhs to increase from 75% to 85%, enhancing product flexibility. We anticipate that this will encourage larger ticket sizes, but the ultimate LTV will be determined by the customer's needs and preferences.

Q: Could you clarify your operating expenses outlook given your AUM growth?

A: Operating expenses have decreased due to increased per-branch loan volumes, averaging over INR25 crores. Going forward, we expect opex to remain stable, mostly rising only in line with inflation rates.

Q: Can you provide details on NPA recoveries and overall collection trends in your gold loan book?

A: Our NPA recovery was driven by customers wanting to reclaim their gold, demonstrating that timely intervention can help. While NPAs fluctuate by geography, we expect overall trends remain stable without significant patterns.

Q: What is your approach to managing capital needs given the recent AUM growth?

A: We are currently comfortable with our capital levels, even with growth plans. We don't have immediate plans for fundraising as our CRAR is strong at around 22%, ensuring we can sustain operations and growth.

Q: Can you elaborate the impact of LTV changes on your customer segments, especially on loans under INR50,000?

A: Customers holding loans under INR50,000 make up about 11% of our portfolio. The flexibility of LTV adjustments for lower amounts aims to streamline our offerings, specifically benefiting the majority of our customer base.

Q: What emerges as the metrics that you focus on for NPA management and effective loan recoveries?

A: Recovery metrics focus on engagement with customers, as many repay when given time. While we have categorized loans as NPAs, efficient communication and restructured plans have led to these recoveries, not drastic recovery measures.

Feel free to ask if you need further clarity on any questions or answers!