Muthoot Finance , a leading non-banking financial company (NBFC), has made a significant move to bolster its presence in the housing finance sector. The company has infused ₹200 crore into its wholly-owned subsidiary, Muthoot Homefin (India) Ltd, as part of an ambitious expansion strategy.

Expansion Plans

The capital injection is aimed at expanding Muthoot Homefin's operations into more than 250 cities across India. This move is expected to significantly increase the housing finance unit's footprint, particularly in tier-II and tier-III markets.

Growth Targets

Muthoot Finance has set an ambitious target for its housing finance subsidiary. The company aims to scale Muthoot Homefin's assets under management (AUM) more than fourfold over the next five years. This growth strategy is focused on strengthening the company's presence in the affordable housing segment.

Recent Performance

Muthoot Homefin has already been showing impressive growth:

• Disbursements have grown nearly six times in the last two years
• Assets under management have doubled to ₹3,096.00 crore

Utilization of Funds

The ₹200.00 crore capital infusion will be used for multiple purposes:

1. Expanding the lending portfolio
2. Enhancing digital infrastructure
3. Increasing the workforce

Strategic Focus

George Alexander Muthoot, Managing Director of Muthoot Finance, emphasized the company's strategic focus:

• Targeting tier-II and tier-III cities for housing growth
• Focusing on first-time home buyers
• Catering to self-employed customers

This move by Muthoot Finance reflects the company's commitment to the housing finance sector and its recognition of the growth potential in smaller cities and towns across India. By strengthening Muthoot Homefin's position, the company is poised to capitalize on the increasing demand for affordable housing in these markets.

In a significant development for the non-banking financial sector, Fitch Ratings has upgraded the long-term rating of Muthoot Finance to 'BB+' from its previous rating. The global credit rating agency has also assigned a stable outlook to the company, signaling confidence in Muthoot Finance's financial health and future prospects.

Rating Upgrade Details

Muthoot Finance, a leading gold loan non-banking financial company (NBFC) in India, has received this important credit rating boost from Fitch Ratings. The upgrade to 'BB+' represents an improvement in the company's creditworthiness according to Fitch's assessment.

Implications of the Rating Upgrade

The rating upgrade to 'BB+' is a positive indicator for Muthoot Finance:

• Improved Creditworthiness: The higher rating suggests that Fitch views Muthoot Finance as having a stronger capacity to meet its financial commitments.
• Potential for Better Borrowing Terms: With an improved credit rating, the company may be able to access capital at more favorable interest rates.
• Enhanced Market Confidence: The upgrade could boost investor and stakeholder confidence in Muthoot Finance's financial stability and business model.

Stable Outlook

Fitch Ratings has also assigned a stable outlook to Muthoot Finance. This outlook indicates that the rating agency expects the company to maintain its financial and operational performance in the near to medium term.

About Muthoot Finance

Muthoot Finance is one of India's largest gold financing companies, providing loans against gold jewelry. The company has a significant presence in the NBFC sector and plays a crucial role in providing financial services to a wide range of customers.

This rating upgrade by Fitch Ratings underscores Muthoot Finance's strong position in the gold loan market and its ability to navigate the challenges in the financial services sector. As the company continues to operate with this improved credit profile, it will be interesting to observe how this translates into its business operations and market performance in the coming months.