Analysts tracking the stock remain divided on the stock’s prospects going forward.
At the end of its earnings call, Muthoot Finance maintained its gold loan guidance for financial year 2026 at 15%, adding that the guidance will be reviewed at the end of the ongoing quarter.
The management said that the gold loan pie has increased, market is widening and that the RBI guidelines appear targeted at newer players due to a surge in gold prices, as old players like them continue to follow the norm.
Brokerage firm Jefferies has a “buy” recommendation on Muthoot Finance, with a price target of ₹2,660. It said that although the company’s standalone gross NPA and credit costs fell from the previous quarter, the gross NPA among MFI subscribers increased.
“Higher gold prices should cushion the drag from potentially tighter LTV norms and support healthy growth,” Jefferies wrote, adding that Muthoot should also benefit from the ongoing rate cut scenario from the Reserve Bank of India.
The brokerage called Muthoot a defensive asset-quality play, anticipating limited loan losses and it expects Muthoot’s net profit and Return on Equity (RoE) to grow at a Compounded Annual Growth Rate (CAGR) of 21% and 20% respectively, over financial year 2025-2027.
Bernstein also has an “outperform” rating on Muthoot Finance with a price target of ₹2,500. It stated while Muthoot’s NIMs moderated, a sharp decline in credit costs helped maintain its Return on Assets at 5.8%.
On the flip side, Morgan Stanley has an “equal-weight” rating on Muthoot with a price target of ₹2,400. It said that financial year 2026 promises to be another year of strong earnings growth, but risk-reward currently is balanced for the company.
It also said that a fall in gold prices is a risk, as it is negative for sentiment. However, earnings downgrades within broader financials could be an upside risk for the stock, according to Morgan Stanley.
Out of the 25 analysts that have coverage on Muthoot Finance, 17 of them have a “buy” rating, fix of them say “hold”, while the other two have a “sell” rating on the stock.
Shares of Muthoot Finance are currently trading 3.5% lower at ₹2,184.1. The stock is currently swinging between gains and losses on a year-to-date basis.
First Published: May 15, 2025 8:17 AM IST
