India's Muthoot Finance slides as investors question durability of earnings jump

SelfRugger · 2026-03-14T22:21:47+00:00

Muthoot Finance shares fell over 12% as investors doubted the sustainability of recent earnings growth, attributed partly to non-recurring income from loan recoveries, amid declining customer additions and softer core profit margins.

SelfRugger

2026-03-14 22:21:47

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India’s Muthoot Finance slides as investors question durability of earnings jump

A woman rides her scooter past a Muthoot Finance branch in Ahmedabad, India, August 21, 2019. REUTERS/Amit Dave · Reuters

Reuters

Fri, 13 February 2026 at 3:07 pm GMT+9 2 min read

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Feb 13 (Reuters) - Shares of India’s Muthoot Finance dropped more than 12% on Friday, heading for their steepest one-day percentage decline in ‌three-and-a-half years, as investors raised concerns over the durability of a ‌surge in third-quarter earnings.

The shares were down 12.3% at 3,566.50 rupees by 11:23 a.m. IST while India’s benchmark Nifty 50 was down 1.02%.

The gold loan provider posted a near doubling of its quarterly profit to 26.56 billion rupees ($292.88 million) on Thursday.

Gold financiers have benefited from record-high gold prices and tighter lending norms in unsecured retail ‌loans, which have pushed ⁠borrowers towards gold-backed financing.

In a note earlier this week, CLSA said gold prices have risen more than 20% in the ⁠past three months, driving strong growth in firms’ gold loan assets.

Brokerages said that a large part of Muthoot Finance’s third-quarter profit came from write-backs on loan recoveries, while the firm’s core margins softened sequentially and customer additions dipped.

Ambit Capital said in ‌a note that about 6.4 billion rupees of the earnings came from interest income recovered from non-performing loans, which it described as non-recurring.

Adjusting for this, earnings were largely in line with estimates, the brokerage said, adding that current valuations “leave no margin of error.”

Muthoot Finance’s shares, rated “hold” on average by 21 ‌analysts, have risen 6.7% so far in 2026 after a 78.4% jump last year.

Jefferies said the finance company’s core net interest margins fell about 70 basis points sequentially, even as ‌reported margins improved on recovery-related income.

The brokerage flagged a 1% sequential decline in active customers and lower loan-to-value ratios amid a spike in gold prices.

CLSA called it “another strong quarter” for Muthoot, citing robust loan growth and stable ‌operating costs, but noted a slowdown in customer additions and a sequential dip in gold tonnage.

($1 = 90.6850 Indian rupees)

(Reporting by Surbhi Misra in Bengaluru; Editing by Mrigank Dhaniwala)

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