Shares of Muthoot Finance surged 10.43% in Thursday’s early trade to a record Rs 2,772.55 on the BSE, buoyed by its better-than-expected Q1FY26 performance
and a wave of bullish analyst upgrades. The gold loan giant posted a consolidated profit after tax (PAT) of Rs 2,046 crore for the quarter ended June 2025, marking a 90% increase from the year-ago period. Loan assets under management (AUM) reached a record Rs 1,33,938 crore, up 37% year-on-year. Standalone AUM rose 42% to Rs 1,20,031 crore, while gold loan AUM climbed 40% to Rs 1,13,194 crore. The performance prompted leading brokerages to revise their price targets. Morgan Stanley upgraded the stock from “equalweight” to “overweight,” setting a new target of Rs 2,920, implying a 16% upside from Wednesday’s close. The brokerage highlighted Muthoot’s “group-leading RoE and EPS growth, potential consensus upgrades despite peer trends, and minimal asset quality risk.” Jefferies raised its price target from Rs 2,660 to Rs 2,950, forecasting over 17% upside. It cited rising gold prices and the potential to increase loan-to-value (LTV) ratios, which could further drive loan growth. Analysts there expect Muthoot to deliver a 23% net profit CAGR and maintain a 21% RoE between FY26 and FY28. Motilal Oswal maintained a “neutral” rating with a Rs 2,790 target, noting that while gold loan growth and limited unsecured credit risk support performance, much of the upside is already priced in. Beyond financials, Muthoot Finance has been expanding its footprint and digital capabilities. The company opened 22 new branches during the quarter, approved an equity infusion of Rs 500 crore in Muthoot Money and Rs 200 crore in Muthoot Homefin, and crossed a Rs 1 trillion market capitalisation milestone. Chairman George Jacob Muthoot emphasised the sector’s role in meeting India’s credit needs, stating: “As the Indian economy advances, demand for quick, reliable, and affordable credit is rising – and gold loans remain a critical enabler in this space. We are also accelerating our digital transformation journey to ensure faster, more seamless credit access for millions of customers across the country.” The company’s marketing efforts have also been recognised, with Muthoot winning six awards at the E4M Golden Mikes, including for its ‘Sunheri Soch’ Season 3 campaign. Investor sentiment remains largely positive. Out of 25 brokerages tracked, 15 have a “buy” rating, six “hold,” and four “sell.” Nirmal Bang upgraded the stock from “hold” to “buy” post-results, while Nuvama reiterated its “buy” stance with an increased target of Rs 2,993, citing strong earnings momentum. The stock’s strong run is being supported by favourable macroeconomic factors. Rising gold prices provide a natural tailwind for gold loan valuations, while India’s growing demand for short-term credit solutions ensures a steady customer base. Muthoot’s negligible exposure to risky unsecured lending further strengthens its risk profile. With ambitious growth plans, a sharp focus on technology, and a proven ability to deliver high returns, Muthoot Finance appears well-positioned to maintain its leadership in the gold loan segment. Analysts suggest that while valuations are becoming stretched, continued growth in gold loan demand and strategic capital allocation could sustain investor interest in the medium term.
