Gold Loan Leader Muthoot Finance to Surpass 15% Growth Guidance in FY25
Gold loan giant Muthoot Finance has hinted at raising its current loan growth guidance of 15% for FY25 after a strong first quarter. Managing Director George Alexander Muthoot told CNBC-TV18 on August 14 that growth could “be even better than 20%,” with a formal revision expected after Q2.
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Three Growth Drivers
The NBFC credited its robust performance to healthy gold loan demand, rising gold prices, and business-friendly RBI guidelines. The final regulatory framework, according to Muthoot, clearly signaled that both the Finance Ministry and RBI intend to support the gold loan sector as it serves the community’s financing needs.
Favorable Lending Conditions
Muthoot Finance believes the toughest phase for the gold loan industry is over, with all players now lending more responsibly. The lender also said it faces no issues in raising capital from banks, while demand remains strong as borrowers have fewer unsecured loan options.
Focus on Competitive Rates
The company aims to maintain its spread at 9.5% and pass on the benefits of lower borrowing costs to customers as banks begin cutting MCLR rates, helping keep its offerings competitive in the market.
Brokerages Turn Bullish
Jefferies has maintained a Buy rating on Muthoot Finance, raising its target price to Rs.2,950 per share, citing stronger-than-expected Q1 profit growth, falling NPAs, and credit costs. Morgan Stanley has upgraded the stock to Overweight with a Rs.2,920 target, highlighting strong ROE, EPS growth, and minimal asset quality risks despite sector-wide concerns over rising bad loans.
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