Muthoot Finance shares declines over 7 pc amid RBI's draft LTV guidelines

IANS May 15, 2025 174 views

Muthoot Finance experienced a significant stock price decline following the RBI's draft loan-to-value guidelines for gold loans. Despite the market volatility, the company demonstrated robust financial performance with a 28% growth in standalone profit. Their consolidated loan assets under management surpassed Rs 1 lakh crore, marking a substantial milestone. The company remains optimistic, expanding its branch network and rewarding shareholders with a generous dividend.

"Until the final gold-lending guidelines are published by the RBI, the growth outlook on gold loans will remain uncertain." - Motilal Oswal Research Note
Mumbai, May 15: Shares of Muthoot Finance on Thursday slipped 7.25 per cent or Rs 163.90 to hit an intra-day low of Rs 2,096 on the national Stock Exchange (NSE) amid Reserve Bank of India's (RBI) draft loan-to-value (LTV) norms.

Key Points

1

RBI draft guidelines create uncertainty for gold loan NBFCs

2

Muthoot Finance reports record Rs 5,201 crore annual profit

3

Company expands to 7,391 branches nationwide

4

Announces highest-ever dividend of Rs 26 per share

.On the Bombay Stock Exchange (BSE), the shares were trading at Rs 2,096.40, down by Rs 166.35 or 7.35 per cent during the intra-day session.

The decline in Muthoot Finance's share price was driven by concerns over the Reserve Bank of India's (RBI) draft regulations on LTV norms for gold loans.

According to analysts, the RBI's draft guidelines, if implemented, could have a near-term impact on the disbursement LTV of Muthoot Finance and its peer non-banking financial companies (NBFCs).

As per a note by Motilal Oswal, "Until the final gold-lending guidelines are published by the RBI, the growth outlook on gold loans will remain uncertain."

The fall in share price came a day after the stock closed 2 per cent higher at Rs 2,262.75.

However, the company reported strong financial results for the fourth quarter (Q4) and full financial year 2024-25 (FY25).

In the March quarter, Muthoot Finance posted a 22 per cent year-on-year (YoY) rise in consolidated profit after tax (PAT), reaching Rs 1,444 crore, compared to Rs 1,182 crore in the same quarter last fiscal (Q4 FY24).

For the full year, the company reported its highest-ever standalone PAT of Rs 5,201 crore, showing a 28 per cent growth from the previous financial year (FY24).

The company also achieved a major milestone by crossing Rs 1 lakh crore in both standalone loan assets under management (AUM) and gold loan AUM.

Overall, the consolidated gross loan AUM increased by 37 per cent YoY to Rs 1,22,181 crore in Q4 FY25, up from Rs 89,079 crore in Q4 FY24.

On a quarter-on-quarter (QoQ) basis, this was a 10 per cent rise. Muthoot Finance's branch network expanded to 7,391 branches across the country, a 13 per cent growth from the previous year's 6,541 branches.

In addition, the company announced its highest-ever dividend of Rs 26 per share (260 per cent on a face value of Rs 10), rewarding its shareholders after a strong year.

Reader Comments

R
Rajesh K.
RBI's cautious approach is understandable, but such sudden policy changes create unnecessary panic in the market. Muthoot has solid fundamentals - this dip might be a good buying opportunity for long-term investors. Their dividend payout shows confidence in future growth.
P
Priya M.
Gold loans are crucial for middle-class families during emergencies. If RBI tightens LTV norms, it will directly affect common people who rely on these loans. Hope they find a balanced approach 🤞
A
Amit S.
️Overreaction by markets! Look at Muthoot's numbers - 37% YoY growth in loan AUM, 28% PAT growth. This is just temporary volatility. RBI guidelines are still in draft stage. Smart money will accumulate at these levels.
S
Sunita R.
As someone who works in banking sector, I think RBI is right to regulate gold loan LTVs. We've seen cases where people borrow beyond repayment capacity. But implementation should be gradual to avoid market shocks.
V
Vikram J.
Muthoot's expansion to 7,391 branches shows their pan-India reach. Even if LTV norms change, their strong distribution network gives them advantage over competitors. This dip won't last long!
N
Neha P.
RBI should consider that gold loans help small businesses and farmers access quick credit. Instead of blanket LTV cuts, maybe they could have different norms for different loan purposes? Just a thought...

We welcome thoughtful discussions from our readers. Please keep comments respectful and on-topic.

Leave a Comment

Your email won't be published


Disclaimer: Comments here reflect the author's views alone. Insulting or using offensive language against individuals, communities, religion, or the nation is illegal.

Tags:
Muthoot Finance RBI Gold Loans NBFC Stock Market Financial Results Reserve Bank Guidelines
You May Like!