Brokerage Boosts Drive Muthoot Finance Shares Higher
Muthoot Finance shares climbed sharply on Thursday, touching a new 52-week high after the company reported impressive first-quarter earnings. The gold loan giant’s stock jumped nearly 10% in early trading, driven by strong financial performance and bullish upgrades from top brokerage firms.
Morgan Stanley raised its rating on the stock from “equalweight” to “overweight,” increasing its price target to ₹2,920 from the previous ₹2,880. This upgrade signals a potential upside of around 16% from the prior closing price. Jefferies also lifted its target price from ₹2,660 to ₹2,950, implying over 17% potential gains. Analysts cited robust return on equity, earnings growth, and negligible asset quality risks as key strengths.
Record Profits and Expanding Loan Book Fuel Rally
The surge in Muthoot Finance shares followed the release of the company’s June quarter results, which revealed a 65% year-on-year jump in consolidated profit after tax to ₹1,974 crore, compared to ₹1,196 crore in the same period last year.
Total income rose 44% to ₹6,485 crore from ₹4,492 crore in the April–June quarter of the previous year. The company’s loan assets under management also saw impressive growth, rising 37% year-on-year to ₹1,33,938 crore in Q1 FY26.
Gold loans continued to be the company’s backbone, supported by favorable gold price trends and strong demand. Analysts noted that the company’s ability to maintain healthy loan growth with minimal credit risk makes it a defensive investment, particularly in a volatile market environment.
Muthoot Finance Shares Hit Fresh 52-Week High
During Thursday’s trading session, Muthoot Finance shares opened higher at ₹2,720 on the BSE and surged to ₹2,799, marking a new 52-week high. The rally represents an 11.48% jump from the previous day’s close of ₹2,510.75. The stock has now gained over 24% on a year-to-date basis, delivering multibagger returns of 132% over the past three years.
Technically, the stock remains strong, trading above its 5-day, 20-day, 50-day, 100-day, and 200-day moving averages. This momentum suggests continued investor interest, supported by its consistent earnings performance.
Analysts See More Room for Growth
Jefferies believes tailwinds from rising gold prices and the scope to increase loan-to-value ratios will help Muthoot sustain its strong growth trajectory. The brokerage projects a net profit CAGR of 23% and return on equity of 21% for FY26–FY28.
Morgan Stanley also expects ongoing consensus upgrades, in contrast to the earnings downgrades seen in some other financial companies. Both firms highlighted Muthoot’s negligible asset quality concerns, even as the sector faces potential increases in bad loans.
Motilal Oswal, however, maintained a “neutral” stance with a price target of ₹2,790, citing that at 2.4 times FY27 price-to-book value, much of the upside might already be priced in.
Strategic Moves and Future Plans
The company’s board has approved an additional equity infusion of up to ₹500 crore into Muthoot Money, representing about 4% of its total AUM, and ₹200 crore into Muthoot Homefin, which accounts for roughly 2% of AUM. These moves are aimed at supporting growth in non-gold loan segments while maintaining a diversified portfolio.
Industry experts believe that Muthoot’s expansion strategy, combined with its leadership in the gold loan segment, positions it well to capitalize on demand in both rural and urban markets. With limited competition from unsecured credit providers, Muthoot’s core lending model remains resilient.
Conclusion:
Muthoot Finance shares have surged to record highs, fueled by stellar quarterly results, aggressive brokerage upgrades, and strong market sentiment. With robust financial metrics, minimal asset quality risks, and favorable industry dynamics, the company appears well-positioned for sustained growth in the coming years.
