Why Did Muthoot Finance Shares Drop Over 7% Amid RBI’s Draft LTV Guidelines?
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Synopsis
Muthoot Finance shares plummeted over 7% amid RBI's draft LTV guidelines, raising concerns for investors. Despite strong quarterly results and record profits, uncertainty looms over the company's growth potential in gold loans. Will Muthoot Finance navigate through these regulatory challenges successfully?
Key Takeaways
- Muthoot Finance shares fell by 7.25% due to RBI draft guidelines.
- Reported 22% YoY increase in consolidated PAT.
- Highest-ever standalone PAT of Rs 5,201 crore.
- Crossed Rs 1 lakh crore in gold loan AUM.
- Declared highest-ever dividend of Rs 26 per share.
Mumbai, May 15 (NationPress) - Shares of Muthoot Finance experienced a decline of 7.25% or Rs 163.90, reaching an intra-day low of Rs 2,096 on the national Stock Exchange (NSE) due to the Reserve Bank of India’s (RBI) proposed loan-to-value (LTV) regulations.
On the Bombay Stock Exchange (BSE), the shares were recorded at Rs 2,096.40, marking a decrease of Rs 166.35 or 7.35% during the intra-day trading.
The fall in Muthoot Finance's stock price has been attributed to concerns regarding the RBI’s draft regulations concerning LTV ratios for gold loans.
Analysts suggest that the RBI’s guidelines, if enacted, may significantly affect the disbursement LTV for Muthoot Finance and other non-banking financial companies (NBFCs) in the near term.
A note from Motilal Oswal stated, "Until the final gold-lending guidelines are released by the RBI, the growth outlook for gold loans remains uncertain."
This drop in share price followed a day after the stock closed 2% higher at Rs 2,262.75.
Nonetheless, the company posted strong financial results for the fourth quarter (Q4) and the full financial year 2024-25 (FY25).
In the March quarter, Muthoot Finance reported a 22% year-on-year (YoY) increase in consolidated profit after tax (PAT), totaling Rs 1,444 crore, up from Rs 1,182 crore in the same period last fiscal (Q4 FY24).
For the full year, the company achieved its highest-ever standalone PAT of Rs 5,201 crore, reflecting a 28% growth compared to the previous financial year (FY24).
Additionally, the company reached a significant milestone by surpassing Rs 1 lakh crore in both standalone loan assets under management (AUM) and gold loan AUM.
Overall, the consolidated gross loan AUM grew by 37% YoY to Rs 1,22,181 crore in Q4 FY25, up from Rs 89,079 crore in Q4 FY24.
On a quarter-on-quarter (QoQ) basis, this reflected a 10% increase. Muthoot Finance has expanded its branch network to 7,391 branches nationwide, a 13% growth from last year's 6,541 branches.
Moreover, the company declared its highest-ever dividend of Rs 26 per share (260% on a face value of Rs 10), rewarding shareholders following a robust year.
Point of View
It is crucial to understand that while Muthoot Finance is facing a significant dip in share prices, the underlying financial health of the company remains robust. The reaction to the RBI's draft guidelines reflects broader market anxieties, but with strong earnings and growth in assets under management, the company still holds potential for long-term investors. NationPress remains committed to delivering unbiased financial news and insights.
NationPress
27/07/2025
Frequently Asked Questions
What caused the decline in Muthoot Finance shares?
The decline was primarily driven by concerns over the Reserve Bank of India's draft loan-to-value guidelines affecting gold loans.
How much did Muthoot Finance shares drop?
Shares of Muthoot Finance dropped by 7.25% or Rs 163.90, reaching an intra-day low of Rs 2,096.
What were the financial results reported by Muthoot Finance?
Muthoot Finance reported a 22% YoY increase in consolidated profit after tax, totaling Rs 1,444 crore for Q4 FY25.
What is the outlook for the company's gold loans?
Analysts suggest that the growth outlook for gold loans will remain uncertain until the final guidelines from the RBI are released.
What dividends has Muthoot Finance declared?
Muthoot Finance has declared its highest-ever dividend of Rs 26 per share, rewarding shareholders after a strong financial year.
