Neutral Muthoot Finance; target of Rs 3800: Motilal Oswal

Neutral

Motilal Oswal's research report on Muthoot Finance

Muthoot Finance’s (MUTH) strong operating performance in 2QFY26 was driven by: 1) strong gold loan growth of ~45% YoY to ~INR1.25t, 2) ~35bp QoQ improvement in GS3 to 2.25%, aided by NPA recoveries, 3) an increase in gold tonnage by ~5% YoY to 209 tons, and 4) spreads rose ~60bp QoQ to ~11.8%, driven by NPA recoveries and a decline in the CoF

Outlook

With a favorable demand outlook for gold loans, driven by the limited availability of unsecured credit, the company is well-positioned to maintain its healthy loan growth momentum. Reiterate our Neutral rating with a revised TP of INR3,800 (based on 3.2x Sep’27E BVPS).

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