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.

Muthoot Capital Services Limited , a prominent player in the financial services sector, has announced a significant move involving its promoters and a new debenture issuance. The company is set to issue green debt securities worth ₹150 crore, backed by non-disposal undertakings from its key promoters.

Promoter Undertakings

Three promoters of Muthoot Capital Services have created non-disposal undertakings on their shareholdings as part of the debenture issuance process. The details of the undertakings are as follows:

Debenture Issuance Details

The non-disposal undertakings are linked to a debenture trust deed for the issuance of 15,000 non-convertible debentures. Key points of the issuance include:

• Total Value: ₹150 crore
• Classification: Green debt securities
• Face Value: ₹1,00,000 per debenture
• Guarantee: Partially guaranteed by GuarantCo Ltd
• Trustee: Vardhman Trusteeship Private Limited (acting as both debenture trustee and security trustee)

Terms of the Undertaking

Under the agreement, the promoters have committed to maintaining a collective stake of at least 51% in the company. This condition ensures that the promoters cannot dispose of their shareholdings in any manner that would reduce their combined ownership below this threshold.

Purpose of Funds

The funds raised through this debenture issuance are earmarked for on-lending to Muthoot Capital Services' borrowers and clients. Specifically, the company intends to use these funds to finance the purchase of new electric vehicles, aligning with the green classification of the debt securities.

Repayment and Listing

The debentures are set to be repaid on a monthly basis, as outlined in the debenture trust deed. Additionally, the company plans to list these debentures on the National Stock Exchange of India Limited, enhancing their liquidity and tradability.

This strategic move by Muthoot Capital Services not only strengthens its capital base but also demonstrates its commitment to sustainable financing through the issuance of green debt securities. The non-disposal undertakings by the promoters further reinforce investor confidence in the company's stability and long-term prospects.