Muthoot Finance profit rises 36% on gold loan growth

Research Analyst: UJVIN NEVATIA (PROPRIETOR: NEVAT INVESTMENTS) | SEBI Registration No.: INH100009628 Muthoot Finance Limited (

) reported consolidated net profit of ₹3,278 crore in Q2 FY27, up 36% year-on-year from ₹2,412 crore. Consolidated total income increased 37% to ₹10,011 crore. What happened? Consolidated loan assets under management (AUM) grew 42% to ₹2.09 lakh crore. Gold loan AUM increased 46% to ₹1.93 lakh crore, reflecting strong demand for secured lending. On a standalone basis, net profit rose 27% to ₹2,977 crore, while total income increased 37% to ₹8,842 crore. However, standalone gross NPA increased to 3.87% from 2.28% in the previous quarter. Impairment on financial instruments also increased to ₹515 crore from ₹95 crore a year earlier. The microfinance subsidiary Belstar reported a profit of ₹78 crore compared with a loss of ₹32 crore in the year-ago quarter. Why does it matter? Strong gold loan growth is driving expansion in the company's loan portfolio and earnings. However, the increase in gross NPAs and impairment costs indicates that asset quality requires attention despite strong business growth. My view The quarter reflects strong earnings growth supported by gold lending. However, rapid AUM expansion should be assessed alongside credit quality and provisioning trends. The ability to maintain growth without a corresponding deterioration in asset quality will be important. What I am watching next I would track gold loan AUM, fresh loan growth, gross NPAs, impairment costs, borrowing costs and the performance of the microfinance subsidiary. No Recommendations Source: Business Standard Disclosure: I, my entity, associates or relatives do not have any holding, position or other material interest in Muthoot Finance Limited.