Muthoot Finance shares tumbled 5 per cent despite strong Q4 performance due to RBI’s draft regulations on loan-to-value (LTV) norms shaking investors’ sentiment.

However, based on the favourable demand outlook for gold loans, the company is well-positioned to maintain its loan growth momentum.

The draft guidelines, if implemented, will have a near-term impact on the disbursement LTV of Muthoot Finance and its peer NBFCs, according to Motilal Oswal. “Until the final gold-lending guidelines are published by the RBI, the growth outlook on gold loans will remain uncertain,” the report read.

“If this norm does not change, it will push borrowers to go back to money lenders and will be a setback for the system,” Nuvama Institutional Equities said.

The Q4 performance was driven by strong gold loan growth, aided by an increase in gold tonnage and decent customer additions.

Its standalone Q4 PAT increased 43 per cent to ₹1,508 crore against ₹1,056 crore in Q4 FY24. The PAT for FY25 was ₹5,201 crore, up 28 per cent from ₹4,050 crore in FY24. The gold lender reported robust AUM growth, a slip in net interest margin (NIM) and lower q-o-q credit cost. 

Motilal Oswal flagged near-term overhand on the stock and valuations until clarity materialise from the final gold-lending guidelines. The brokerage has reiterated neutral rating at an unchanged target price of ₹2,400.

Given the company’s consistent performance and firm gold rate, Nuvama has retained buy rating at an increased target price of ₹2,625 from ₹2,550 earlier.

Global brokerage Jefferies has assigned buy call at ₹2,660 per share, stating that higher gold prices would cushion the drag from potentially tighter LTV norms.

Bernstein has an outperform rating at a target price of ₹2,500 and Morgan Stanley assigned equal-weight at ₹2,400.

Shares traded 5.25 per cent lower on the BSE at ₹2,143.95 as at 10.46 am, after hitting a low of ₹2,139.20.

Published on May 15, 2025