Muthoot Finance Q3 Profit Doubles, but Shares Fall on One-Off Concerns

Muthoot Finance posted stellar Q3 FY26 results, with standalone net profit nearly doubling to ₹2,656 crore (up 95% YoY) and revenue rising 64% to ₹7,243 crore, driven by a record surge in gold loan disbursements. Standalone AUM hit an all-time high of ₹1.48 lakh crore, up 51% YoY, with gold loans growing 50% to ₹1.4 lakh crore. The company raised its full-year AUM growth guidance to 45% from 30–35%, citing strong demand as credit tightens elsewhere. Net interest income jumped to ₹4,467 crore (+64% YoY), while asset quality improved — Stage 3 NPAs fell sharply to 1.58% (from 2.25%) and credit costs eased to 32 bps. However, despite the strong numbers, shares dropped over 11% to ₹3,610, as brokerages flagged significant one-off gains skewing profitability. Nuvama Institutional Equities maintained a ‘Buy’ rating with a target of ₹4,700 (~30% upside), citing durable earnings and resilience in yields. It noted around ₹624 crore in recovery income (vs ₹300 crore earlier), including proceeds from legacy NPAs and auctions. Motilal Oswal retained a ‘Neutral’ view with a target of ₹4,500 (~25% upside), acknowledging strong growth but highlighting that ~₹700 crore in exceptional income inflated profits, raising sustainability concerns. The market reaction reflects caution: while Muthoot’s core business is scaling impressively and asset quality is improving, near-term margins are boosted by non-recurring recoveries. Investors now await consistent underlying performance before re-rating the stock.