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Muthoot Finance shares slump as gold-loan net interest margin falls

The company said lower gold-loan lending rates and normalization followed strong interest recoveries in FY26, while it added 86 branches in Q1 to reach 7,654.

Reported · Written up by our desk · Asia

Muthoot Finance’s stock fell as much as 10% on Monday after its net interest margin declined sequentially by 297 basis points to 10.41% in the June quarter, prompting downgrades to earnings estimates, LiveMint Markets reported.

The lender attributed the margin pressure to a drop in gold-loan yields as gold prices softened. It said the yield decline reflected lower lending rates and normalization after strong interest recoveries and loan renewals in FY26, when aided by a rally in gold prices.

Management reiterated its guidance for gold-loan assets under management growth of about 15% in FY27, but said it will revise the target after Q2FY27 earnings. It also reported gold-loan disbursements to new customers rising 41% year-on-year, while gold-loan AUM increased 44% year-on-year.

To support distribution, Muthoot added 86 branches in Q1 at the group level, bringing total branch count to 7,654, and it plans to add 500-600 branches this year. The company also expects gold-loan yields to stabilize at around 18-18.5%, versus 17.93% in Q1 and 19.56% in Q4FY26, though management said a return to FY26-level yields is unlikely amid rising competition.

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