Muthoot Finance Market Cap Falls by More Than Rs 20,000 Crore in Just 1 Day; Here’s Why

Muthoot Finance reported a staggering 94.9 per cent year-on-year increase in net profit for the third quarter of FY26, reaching Rs 2,656 crore. This growth was underpinned by a 64 per cent surge in Net Interest Income (NII), which rose to Rs 4,467 crore. Despite these record-breaking figures, the company’s stock price plummeted by over 12 per cent following the announcement, wiping out more than Rs 20,000 crore in market capitalisation in a single day. The sharp correction suggests that investors are looking beyond the headline growth to evaluate the long-term sustainability of such high earnings.

The company’s consolidated Loan Assets Under Management (AUM) reached a significant milestone, crossing the Rs 1.64 lakh crore mark, a 48 per cent increase from the previous year. On a standalone basis, the AUM stood at Rs 1.47 lakh crore, with the core gold loan portfolio contributing roughly Rs 1.39 lakh crore. This 50 per cent YoY jump in gold loans highlights the company's aggressive expansion and its ability to capitalise on the rising value of gold, as it currently holds 205 tonnes of the precious metal valued at Rs 2,501 billion.

For the first nine months of FY26, Muthoot Finance posted a consolidated profit after tax of Rs 7,209 crore, marking an 84 per cent increase compared to the prior year. The company’s subsidiaries also showed strong momentum; specifically, Muthoot Money saw its AUM skyrocket by 168 per cent to Rs 8,003 crore. This subsidiary turned a profit of Rs 203 crore, a massive recovery from the Rs 2 crore loss reported in the same period last year, further diversifying the group’s revenue streams.

Operational efficiency remained a strong suit for the NBFC, with collection efficiency improving to 99.64 per cent. The company also continued its physical expansion by opening 39 new gold loan branches during the first nine months, bringing the total count to 1,290. Beyond gold, Muthoot Homefin reported a 24 per cent growth in AUM to Rs 3,380 crore, while the group began exploring new revenue avenues, such as corporate agency income and direct assignment transactions, which were executed to the tune of Rs 178 crore in Q3.

Market experts attribute the 12 per cent share price slump to concerns regarding the quality of the earnings boost. A significant portion of the profit jump was driven by recovery-related gains, which are often viewed as one-time events rather than recurring income. Additionally, sequential pressure on core margins and a slight slowdown in the acquisition of active customers led traders to lock in gains, especially since the stock had enjoyed a strong rally leading up to the results.

Disclaimer: The article is for informational purposes only and not investment advice.