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.

Muthoot Finance , a leading gold loan company, has reported impressive financial results for the quarter ended June 30, showcasing robust growth across key metrics.

Record Assets Under Management

The company achieved a record standalone Assets Under Management (AUM) of ₹1,20,031.00 crores, driven by a substantial 40% year-on-year growth in gold loans. This growth amounted to ₹32,272.00 crores for the full year, with a notable 10% quarter-on-quarter increase of ₹10,238.00 crores.

Stellar Profit Growth

Muthoot Finance's standalone Profit After Tax (PAT) for the quarter surged by 90% to reach ₹2,046.00 crores, underscoring the company's strong financial performance.

Gold Loan Business Expansion

The company's gold loan AUM witnessed a significant 10% quarter-on-quarter growth to ₹10,238.00 crores. This growth was accompanied by a 100 basis points expansion in yield to 19.56%, attributed to Non-Performing Asset (NPA) recoveries and Asset Reconstruction Company (ARC) collections.

Improved Asset Quality

Muthoot Finance successfully reduced its NPAs by ₹700.00 crores quarter-on-quarter, demonstrating effective management of asset quality. The company also continued its expansion by opening 22 new branches during the period.

Subsidiary Performance

The company's subsidiaries also showed strong performance:

• Muthoot Home Finance: AUM grew by 41% year-on-year to ₹3,096.00 crores
• Muthoot Money: AUM surged by 202% year-on-year to ₹5,000.00 crores

Market Capitalization Milestone

During the quarter, Muthoot Finance's market capitalization crossed the ₹1 trillion mark, reflecting investor confidence in the company's growth trajectory.

Management Outlook

The management expressed optimism about sustaining growth, citing favorable new RBI guidelines that allow higher loan-to-value ratios of 85% for loans up to ₹2.50 lakhs.

Financial Performance Insights

• The company's yield expanded to 19.56%, with approximately ₹400.00 crores of additional interest income from NPA recoveries and ARC collections.
• Muthoot Finance maintains a strong capital position with a Capital to Risk-weighted Assets Ratio (CRAR) of around 22%.
• The company's focus remains on gold loans, with non-gold loan business comprising about 13-14% of the portfolio.

Customer Base and Loan Distribution

• 85% of Muthoot Finance's customers have loan amounts below ₹2.50 lakhs.
• Loans above ₹3.00 lakhs constitute 40% of the AUM, while loans between ₹1.00 lakh to ₹3.00 lakhs make up 34%, and loans below ₹1.00 lakh account for 26%.

Future Outlook

Muthoot Finance remains committed to its core gold loan business while also seeing growth opportunities in its subsidiaries. The company plans to maintain its spread of 9.5% and pass on any benefits from reduced borrowing costs to customers.

As per the transcript of the analyst call, the management reaffirmed its leadership in the gold loan segment, supported by a pan-India branch network, strong brand equity, and deeper customer engagement. The company is also accelerating efforts to digitally enable its gold loan offerings, aiming to make credit access faster, more seamless, and more inclusive.

With a strong start to the fiscal year and favorable regulatory changes, Muthoot Finance appears well-positioned to capitalize on the growing acceptance of gold loans as a reliable and accessible form of credit in the Indian market.