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Muthoot Finance Q2 Profit Surges 87.5%, Ups Gold Loan Growth Guidance
- Priya Sharma
- Dec 17
- 3 min read
Muthoot Finance, India's premier gold loan financier, announced impressive second-quarter results, propelled by elevated gold prices and a surge in demand for secured lending options.
Exceptional Profit Surge
The company's standalone net profit for the July-September quarter soared 87.5% year-on-year to ₹23.45 billion, from ₹12.51 billion in the prior-year period. This standout performance highlights Muthoot Finance's adeptness at leveraging prevailing market dynamics.
Record-high gold prices during the quarter played a pivotal role, inflating collateral values and enabling borrowers to secure larger loans against existing gold holdings. As of mid-December 2025, gold prices remain robust, hovering around $4,300 per ounce, driven by geopolitical tensions, central bank buying, and investor preference for safe-haven assets. This persistent elevation continues to support higher loan-to-value ratios and disbursements in the gold loan sector.
Primary Drivers of Growth
Several converging factors underpinned the robust quarterly outcomes:
Persistent High Gold Prices: Frequent record peaks enhanced the realizable value of pledged gold, directly boosting loan books.
Migration from Unsecured Credit: Heightened regulatory scrutiny and risk weights on unsecured loans have steered borrowers towards safer, collateral-backed alternatives like gold loans.
Strong Interest Income Growth: Increased 55% to ₹63.04 billion, reflecting expanded operations and efficient yield management.
Regulatory support from the Reserve Bank of India (RBI), including flexible LTV norms introduced in recent guidelines, has further facilitated accessibility. These measures, alongside curbs on riskier lending segments, have solidified gold loans as a go-to option for quick liquidity, especially in rural and semi-urban India where Muthoot maintains a vast network.
Significant Balance Sheet Expansion
Standalone loan assets under management climbed 47% year-on-year to ₹1.32 trillion as of September end, demonstrating sustained borrower trust and operational reach.
Asset quality saw notable enhancement, with gross stage three loans (delinquencies over 90 days) declining to 2.25% from 2.58% in the preceding quarter. The secured nature of gold loans, coupled with high recovery rates through auction mechanisms, underpins this resilience, even amid economic fluctuations.
Muthoot Finance's diversified portfolio, encompassing subsidiaries in microfinance, housing, and vehicle finance, adds layers of stability while the core gold loan business drives the majority of growth.
Ambitious Revised Outlook
In a clear sign of confidence, the firm elevated its fiscal 2026 gold loan growth projection to 30%-35%, doubling the prior guidance of 15%.
Managing Director George Alexander Muthoot attributed this upgrade to supportive RBI policies, enduring high gold prices, and restrictive measures on unsecured lending, all poised to fuel ongoing demand. This forecast positions Muthoot to outpace industry averages, capitalizing on its market leadership and extensive branch infrastructure spanning over 6,000 locations.
Investor Enthusiasm and Ongoing Momentum
On the results announcement day, shares gained 2%, contributing to a remarkable 59% year-to-date rise in 2025. As of mid-December 2025, the stock has maintained upward momentum, recently touching all-time highs around ₹3,850, buoyed by consistent earnings delivery and favorable sector tailwinds.
This performance underscores investor faith in the gold loan narrative, particularly as traditional banking faces headwinds from rising non-performing assets in unsecured segments.
Looking forward, Muthoot Finance remains committed to inclusive growth, with initiatives in financial literacy and community development complementing its business model. In an environment where gold retains cultural and economic significance in India, the demand for reliable gold-backed financing is expected to endure.
Overall, these Q2 results affirm Muthoot Finance's strong positioning in a resilient sector. With favorable macros, prudent management, and a clear growth trajectory, the company is well-equipped to navigate future opportunities and deliver sustained shareholder value while serving the financing needs of underserved populations across the country.
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