Muthoot Finance Limited has completed the allotment of 3.25 lakh equity shares in its subsidiary, Muthoot Money Limited, to reinforce the capital base and support the company's growth trajectory. The strategic capital injection demonstrates the parent company's commitment to strengthening its subsidiary operations.

Equity Allotment Details

The funds raised through the equity allotment will serve multiple strategic purposes for Muthoot Money's operations:

• Business funding for expansion initiatives
• General corporate purposes
• Repayment of existing loans
• Improvement of capital adequacy ratio

As the sole shareholder, Muthoot Finance continues to back Muthoot Money's strategic initiatives while ensuring adequate capitalization for sustained growth. The governance structure includes several Muthoot Finance directors serving on Muthoot Money's board, providing strategic guidance and oversight.

Subsidiary Performance Growth

Muthoot Money has demonstrated remarkable business expansion over the past three financial years, showcasing significant revenue growth:

This substantial growth reflects the subsidiary's expanding business footprint and successful market penetration strategies.

Parent Company Performance

Muthoot Finance has reported strong financial performance in recent quarters. The company achieved an 87.4% year-on-year jump in net profit to ₹2,345.00 crore for Q2 FY26, supported by robust growth in its core business segments.

Market Response

Shares of Muthoot Finance Limited closed at ₹3,794.70, registering a gain of ₹58.20 or 1.56% during the trading session. The positive market response reflects investor confidence in the company's strategic capital allocation decisions and subsidiary growth initiatives.

The equity injection into Muthoot Money aligns with Muthoot Finance's broader strategy of strengthening its subsidiary operations while maintaining strong oversight and governance structures across its business portfolio.

Muthoot Finance has received a bullish upgrade from Morgan Stanley, with the global brokerage firm raising its price target based on strong gold loan segment performance expectations.

Morgan Stanley's Upgraded Assessment

The brokerage has maintained its overweight rating on Muthoot Finance while hiking the price target. The revision reflects Morgan Stanley's confidence in the company's gold loan business prospects.

Enhanced Growth Projections

Morgan Stanley has revised its growth estimates upward, reflecting stronger expectations for the gold loan segment. The firm's updated projections demonstrate increased confidence in Muthoot Finance's business trajectory.

The brokerage has raised its FY26 to FY28 earnings per share estimates, with the upward revision driven entirely by higher anticipated gold loan growth. This adjustment reflects Morgan Stanley's view that the gold loan segment may be a key performance driver for the company.

Analyst Sentiment and Market Outlook

The broader analyst community shows mixed but generally positive sentiment toward Muthoot Finance. According to Bloomberg data, the distribution of analyst recommendations reflects varied perspectives on the stock's prospects.

Despite Morgan Stanley's bullish stance, the average 12-month consensus price target among all analysts implies a downside of 3.10%, suggesting some divergence in market expectations.

Sum-of-Parts Valuation Impact

Morgan Stanley's analysis indicates that the strong outperformance expectations in the gold segment have led to an 8.00% increase in the sum-of-parts price target and scenario values. This methodology suggests the brokerage sees multiple value drivers contributing to the enhanced target price, with gold loan growth being the primary catalyst.