The lender delivered an all-round beat. Net interest margins expanded, recoveries remained steady for yet another quarter, and AUM growth came in strong and broadly in line with expectations.
|
Standalone – |
2QFY25 |
1QFY26 |
2QFY26 |
QoQ |
YoY |
Vs Est |
|
AUM |
90,197 |
1,20,031 |
1,32,305 |
10.2% |
46.7% |
0.3% |
Profit performance was particularly exceptional, aided by a ₹300-crore cushion from a sharp reduction in NPAs.
This translated into a 58% year-on-year and 15% sequential rise in net interest income, while pre-provision operating profit jumped 70% YoY and 17% QoQ. Profit after tax surged 87% YoY and 15% QoQ.
|
Muthoot |
2QFY25 |
1QFY26 |
2QFY26 |
QoQ |
YoY |
Vs Est |
|
Net Interest Income |
2,518 |
3,473 |
3,992 |
14.9% |
58.5% |
12.8% |
|
PPOP |
1,915 |
2,789 |
3,266 |
17.1% |
70.5% |
20.2% |
|
Provisions |
207 |
43 |
114 |
163.5% |
-44.9% |
-4.0% |
|
PAT |
1,251 |
2,046 |
2,345 |
14.6% |
87.4% |
21.6% |
The ₹300-crore recovery gain also contributed to the increase in interest yields, which rose 43 basis points sequentially. With the cost of funds easing, NIMs expanded by 50 basis points during the quarter.
Management commentary
For FY26, the management has revised its AUM growth guidance to 30-35%, up from the earlier forecast of 15%, and expects steady-state yields to remain around 18-18.5%.
It also pointed out the improving trends in the microfinance landscape. At Belstar Microfinance, AUM held steady at ₹7,700 crore, while losses narrowed sharply from ₹128 crore to ₹32 crore sequentially.
Brokerages view
Brokerage firm CLSA has an ‘Outperform’ rating and has raised its target price to ₹4,000, citing robust gold loan growth of 10% QoQ and 47% YoY to ₹1.32 lakh crore. It expects a 25% AUM CAGR over FY25-27.
Jefferies also reiterated its ‘Buy’ call with a ₹4,000 target, forecasting further NIM expansion and easing credit costs.
The brokerage estimates a 36% EPS CAGR and over 24% ROE through FY26-27.
