Muthoot Capital Services Limited has made a significant move in the green finance sector by allotting ₹150 crore worth of green bonds. This strategic decision underscores the company's commitment to sustainable financing and environmental responsibility.

Bond Details

The company has allotted 15,000 rated, listed, senior, secured, redeemable, transferable, non-convertible certified Green Bonds on a private placement basis. Here are the key details of the bond issue:

Security Structure

The debentures are backed by a robust security structure:

1. A first ranking pari passu floating charge over loan receivables
2. Security cover of 1.1 times the outstanding principal amount
3. Charges over Debt Service Reserve Account (DSRA) and Escrow Account

Approval and Allotment Process

The allotment was approved by the company's Debenture Issue and Allotment Committee. The meeting for this approval commenced at 9:30 a.m. and concluded at 10:45 a.m. on October 17, 2025.

Significance of Green Bonds

Green bonds are financial instruments designed to support climate-related or environmental projects. By issuing these bonds, Muthoot Capital Services is aligning its financing activities with sustainable and eco-friendly initiatives, potentially attracting investors who prioritize environmental, social, and governance (ESG) factors in their investment decisions.

Market Implications

This move by Muthoot Capital Services could signal a growing trend in the Indian financial sector towards green financing. It may encourage other companies to explore similar sustainable finance options, contributing to the overall growth of the green bond market in India.

The successful allotment of these green bonds may also enhance Muthoot Capital Services' reputation as a forward-thinking and environmentally conscious financial institution, potentially broadening its investor base and strengthening its market position.

Muthoot Capital Services Limited , a prominent player in the financial services sector, has reported a mixed set of results for the second quarter of fiscal year 2025-26. The company managed to turn a profit despite facing significant challenges in the form of increased impairment costs and finance expenses.

Financial Performance

For the quarter ended September 30, 2025, Muthoot Capital Services posted a profit of ₹282.72 lakhs, marking a significant recovery from the loss of ₹466.99 lakhs reported in the previous quarter. However, when compared to the same period last year, the company's half-year profit saw a substantial decline, dropping to ₹184.27 lakhs from ₹2,677.20 lakhs.

The company's revenue from operations showed improvement, increasing to ₹15,354.39 lakhs in Q2 from ₹14,531.77 lakhs in Q1. This growth was primarily driven by higher interest income, which stood at ₹14,688.25 lakhs for the quarter.

Key Financial Metrics

Challenges and Risk Management

The company faced significant challenges during the quarter, with impairment on financial instruments amounting to ₹1,669.85 lakhs in Q2. Although this represents a decrease from the ₹2,667.60 lakhs reported in Q1, it remains a substantial figure that impacts the company's profitability.

Finance costs also saw an increase, rising to ₹8,138.60 lakhs from ₹7,509.22 lakhs quarter-on-quarter, reflecting the higher cost of funds in the current economic environment.

Muthoot Capital Services reported 10 fraud incidents totaling ₹37.01 lakhs during the quarter, for which the company has made a 100% provision, demonstrating a proactive approach to risk management.

Asset Quality

The company's asset quality showed mixed trends:

• Gross NPA ratio improved to 6.46%
• Net NPA ratio stood at 3.07%

These figures suggest that while the company is managing its non-performing assets, there is still room for improvement in overall asset quality.

Fundraising and Capital Adequacy

During the quarter, Muthoot Capital Services raised ₹350 crores through non-convertible debentures and subordinated debt, bolstering its capital position. This fundraising effort may help the company in expanding its lending activities and managing its liquidity requirements.

Earnings Per Share

The earnings per share for the quarter was ₹1.72, a significant improvement from the negative ₹2.84 reported in the previous quarter. However, this is still lower than the ₹9.71 EPS reported in the same quarter of the previous year.

Outlook

While Muthoot Capital Services has shown resilience by returning to profitability in Q2, the company continues to navigate a challenging financial landscape. The improvement in revenue and the successful fundraising efforts are positive indicators, but the increased finance costs and ongoing impairment issues suggest that the company may need to maintain a cautious approach in the coming quarters.

The management's focus on risk management, as evidenced by the full provisioning for fraud incidents, is commendable. However, investors and stakeholders will likely be watching closely to see how the company manages its asset quality and controls costs in future quarters to sustain and improve its profitability.

As the financial services sector continues to evolve, Muthoot Capital Services' ability to adapt to market conditions and maintain its growth trajectory will be crucial for its long-term success.