Muthoot Microfin Limited (MML) has received a significant boost in its credit outlook, as Crisil Ratings upgraded the company's long-term rating outlook to 'Positive' from 'Stable' while reaffirming its 'A+' rating. This upgrade follows a similar rating action on MML's parent company, Muthoot Fincorp Limited.

Rating Action Details

Crisil has reaffirmed the 'A+' rating on MML's long-term bank facilities and non-convertible debentures (NCDs) while upgrading the outlook. The rating agency has also assigned a 'Crisil A+/Positive' rating to Rs 300 crore of non-convertible debentures. Additionally, the 'Crisil A1+' rating on the company's commercial paper program of Rs 200 crore has been reaffirmed.

Factors Driving the Upgrade

The positive outlook revision is attributed to several factors:

1. Improved Collections: MML's collections have shown stability. The collection efficiency in the non-overdue bucket has remained above 99%.

2. Strong Provision Coverage: The company maintains a robust provision cover of 69.00% as of June 30, indicating a conservative approach to potential credit risks.

3. Asset Quality Stabilization: The gross non-performing assets (GNPA) ratio remained flat at 4.80% as of June 30, compared to 2.30% in March.

4. Adequate Capitalization: MML's networth stood at Rs 2,641.00 crore with a gearing of 2.80 times as of June 30, reflecting adequate capitalization.

5. Diversified Resource Profile: The company has over 50 lenders and a diversified borrowing mix, including term loans, external commercial borrowings, non-convertible debentures, and securitization.

Business Performance

MML's assets under management (AUM) saw a slight decrease to Rs 12,253.00 crore at the end of June from Rs 12,357.00 crore in March. This minor contraction in AUM suggests a cautious approach to growth amidst challenging market conditions.

Future Outlook

Crisil Ratings expects MML's earnings profile to improve, supported by a potential reduction in credit costs as portfolio asset quality improves. The rating agency will closely monitor the company's ability to show substantial improvement in portfolio quality.

Upcoming Fundraising

According to the LODR data, MML's Debenture Issue and Allotment Committee is scheduled to meet on October 3 to consider and approve fund-raising through the issuance of Non-Convertible Debentures (NCDs) on a private placement basis. This move could further strengthen the company's liquidity position and support its growth plans.

The positive outlook revision and reaffirmation of ratings reflect Crisil's expectation of continued support from Muthoot Fincorp Limited and MML's strategic importance to the Muthoot Pappachan group. As MML navigates through the current market challenges, its ability to maintain asset quality, improve profitability, and sustain its growth trajectory will be crucial factors to watch in the coming quarters.

Muthoot Microfin Limited , a prominent player in the microfinance sector, has announced a crucial meeting of its Debenture Issue and Allotment Committee scheduled for October 3, 2025. The primary agenda of this meeting is to consider and potentially approve fundraising through the issuance of Non-Convertible Debentures (NCDs) on a private placement basis.

Committee Meeting Details

The company has formally notified both the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE) about this upcoming meeting, adhering to regulatory disclosure requirements. This move signals Muthoot Microfin's proactive approach to exploring diverse funding avenues to support its business operations and growth strategies.

Recent Credit Rating Update

It's worth noting that this meeting comes on the heels of a positive credit rating outlook revision by CRISIL Ratings. As per the latest LODR data:

• CRISIL has revised the outlook on Muthoot Microfin's long-term credit facilities from 'Stable' to 'Positive'
• The rating agency has reaffirmed the company's long-term rating at 'CRISIL A+/Positive'
• This rating applies to various financial instruments, including bank loan facilities and existing Non-Convertible Debentures

Implications for Investors

The potential issuance of NCDs, coupled with the recent positive credit rating outlook, could be seen as a strategic move by Muthoot Microfin to capitalize on favorable market conditions and strengthen its financial position. For investors, this development may present an opportunity to invest in a company that is actively managing its capital structure and has received a vote of confidence from a leading credit rating agency.

As the microfinance sector continues to play a crucial role in financial inclusion, Muthoot Microfin's fundraising initiatives will be closely watched by market participants. The outcome of the October 3 committee meeting could provide further insights into the company's financial strategy and growth plans for the near future.