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Informist, Thursday, May 14, 2026

 

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--Muthoot Fin: PM's comments against buying gold do not affect us 
--CONTEXT: Comments by Muthoot Finance's mgmt in post-earnings analyst call 
--Muthoot Fin:See continuous growth in gold loans, no threat from competitors 
--Muthoot Fin: Expect AUM to increase 15% in FY27 
--Muthoot Fin: Plan to open 200-300 more branches in FY27 
--Muthoot Fin: Expect borrowing cost to inch up in FY27

 

By Kabir Sharma and Shweta

 

MUMBAI – Gold loan financier Muthoot Finance Ltd. on Thursday said Prime Minister Narendra Modi's recent remarks discouraging consumers from buying gold would not affect its business, as the company lends only against household gold jewellery and not bullion purchases. The company also exuded confidence in continued growth in the gold loans segment.

 

In the company's post-earnings analyst call, the management said there was still substantial untapped household gold available for lending in India, reiterating that the company did not finance gold purchases or bullion. "The government has said that imports of gold should reduce and taxes have been increased. But we do not finance gold purchases, bullion or bars. We finance only household ornaments," the management said.

 

The company added that despite tighter import measures and rising competition, it continued to see "good scope and good prospects" for the gold loan business going forward.

 

The management also dismissed concerns around increasing competition from new entrants and large non-banking finance companies entering the gold loan segment, saying the business remained operationally intensive and required specialised expertise. "We see continuous growth in this sector and better things to happen. Competition will come and go, but many players are opportunistic," the company said, adding that it did not see competitors taking away meaningful share of its business.

 

The lender guided for around 15% growth in assets under management in 2026-27 (Apr-Jun), consistent with its guidance in previous years. The management said it would review the guidance again after the first or second quarter depending on business momentum. The company also said it planned to open 200-300 additional branches during FY27, higher than the 177 branches opened during FY26. The expansion would primarily focus on the core gold loan business, while subsidiary Belstar Microfinance could also add around 200 gold loan branches.

 

The Kerala-based gold financier's total assets under management rose 50% on year to INR 1.63 trillion at the end of March, with gold loan AUMs rising 50% to INR 1.54 trillion.

 

The management further indicated that borrowing costs were expected to inch up in FY27, suggesting lending yields may remain elevated. "Our treasury team says borrowing costs are looking northward, so we may not be able to reduce rates further and may maintain them around current levels," it said. The company also attributed changes in customer mix and tonnage trends to rising gold prices and higher loan eligibility per gram of gold pledged. It said smaller-ticket customers had declined, while higher-value customers and larger ticket loans had increased.

 

Muthoot said the average loan-to-value ratio on its gold loan book stood at around 57%, providing significant collateral cushion even in delinquent accounts. 

 

The gold financier's net profit for the March quarter rose 105% on year to INR 30.86 billion, nearly INR 4 billion higher than analysts' consensus estimate. Sequentially, the net profit was up 16%. On Thursday, shares of the lender closed at INR 3,531 on the National Stock Exchange, up 0.7% from the previous close.  End

 

Edited by Tanima Banerjee

 

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