Muthoot Finance Shares Drop 6% Despite Beating Q4 Earnings Estimates, Analyst Predicts Market Share Decline

Muthoot Finance Limited Shares Tumble 6% Despite Strong Q4FY26 Earnings

Muthoot Finance Limited's shares fell nearly 6 per cent in Friday's trade despite the company reporting a strong March quarter performance. The stock was trading at Rs 3,325.40 on the NSE, down Rs 205.70 or 5.83 per cent in morning trade.

The company's Q4FY26 earnings showed a significant improvement, with a net profit of Rs 3,397 crore, up 135 per cent year-on-year from Rs 1,444 crore in the same quarter last year. Revenue rose 65 per cent to Rs 9,288.7 crore from Rs 5,621.7 crore, while EBITDA climbed 90.5 per cent to Rs 7,760 crore from Rs 4,072.5 crore a year ago.

However, brokerage Motilal Oswal Financial Services flagged concerns around business metrics. Gold tonnage declined 4% QoQ to 196 tons, and the customer base declined 2% QoQ to ~6.41m. Gold loan LTV rose 270bp QoQ to 58.5%.

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Brokerage views on Muthoot Finance Limited remained largely positive despite Friday's sharp stock correction. Most analysts highlighted strong earnings momentum, healthy margins, and robust profitability. Bernstein maintained its 'Outperform' rating on Muthoot Finance with a target price of Rs 4,500. The brokerage noted that the company delivered a healthy quarter, supported by continued strength in gold prices, which drove 50 per cent year-on-year AUM growth and supported profitability expansion.

Morgan Stanley retained its 'Overweight' rating with a target price of Rs 4,330. The brokerage highlighted a strong Q4 profit beat, though it noted that loan growth could have been better. Morgan Stanley raised its FY27 and FY28 EPS estimates by 6 per cent and 4 per cent respectively, while also increasing NIM estimates by 63 basis points and 55 basis points.

CLSA maintained its 'Outperform' call with a target price of Rs 4,600. CLSA said Muthoot's Q4 profit beat estimates by 30 per cent, primarily led by stronger net interest income and a sharp improvement in loan yields. Jefferies maintained its 'Buy' rating on the stock while cutting its target price to Rs 4,350. The brokerage said Q4 profit grew 105 per cent year-on-year to Rs 30.8 billion, ahead of estimates, supported by stronger net interest income.

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