Muthoot Capital shifts funding toward NCDs and deposits

Muthoot Capital Services Limited increased debt securities to Rs 1,373.01 crore and deposits to Rs 158.32 crore at September 30, 2026, while borrowings other than debt securities fell to Rs 1,796.72 crore from Rs 1,990.30 crore at March 31, 2026. The lender also reported Rs 76.22 crore of net operating cash flow for the period ended Sep-26.

How did Muthoot Capital’s funding mix change by September 2026?

Muthoot Capital moved part of its funding mix from borrowings other than debt securities toward debt securities and deposits during the six months to September 30, 2026. Debt securities rose by Rs 158.48 crore from Rs 1,214.52 crore at March 31, while deposits increased by Rs 76.11 crore from Rs 82.22 crore. Borrowings other than debt securities declined by Rs 193.58 crore over the same balance-sheet interval.

The balance-sheet changes show that the combined increase in debt securities and deposits was Rs 234.59 crore, exceeding the reduction in other borrowings by Rs 41.01 crore. Total liabilities increased by Rs 86.25 crore to Rs 3,471.43 crore, while total equity rose by Rs 12.33 crore to Rs 682.75 crore. Loans were largely unchanged, rising by Rs 9.51 crore to Rs 3,285.46 crore.

What do Muthoot Capital’s financing cash flows show?

Muthoot Capital reported Rs 400 crore of non-convertible debenture, or NCD, proceeds and Rs 243.56 crore of NCD repayments for the period ended Sep-26, producing a calculated net inflow of Rs 156.44 crore. That cash-flow movement broadly aligns with the Rs 158.48 crore rise in debt securities recorded on the September 30 balance sheet.

Public-deposit proceeds were Rs 87.96 crore and repayments were Rs 12.77 crore, resulting in a calculated net inflow of Rs 75.19 crore. Commercial paper had no reported proceeds during Sep-26 and repayments of Rs 173.90 crore. Securitisation proceeds were Rs 214.63 crore, but repayments were higher at Rs 320.24 crore.

The cash-flow statement labels the comparative column as period ended Mar-26, rather than the corresponding prior half year, so it is not a like-for-like half-year comparison with Sep-26. Within the Sep-26 period, term loans from banks and other financial institutions generated Rs 260 crore of proceeds and had Rs 178.63 crore of repayments. Working-capital demand loans and cash credit added Rs 17.997 crore of proceeds and Rs 14.78 crore of repayments.

Did Muthoot Capital generate operating cash during the period?

Muthoot Capital generated net cash from operating activities of Rs 76.22 crore in the period ended Sep-26, compared with net cash used in operating activities of Rs 374.44 crore in the period labelled Mar-26. The Sep-26 operating result followed cash generated from operations of Rs 219.03 crore, finance costs paid of Rs 153.67 crore and direct taxes received of Rs 10.86 crore.

Working-capital movements in Sep-26 included a Rs 17.26 crore decrease in loans, a Rs 27.18 crore decrease in bank balances other than cash and cash equivalents, and a Rs 21.24 crore increase in trade payables. Other financial liabilities added Rs 24.72 crore to working-capital cash flow. These movements contributed to net changes in working capital of Rs 87.13 crore.

Investing activities used Rs 82.51 crore in Sep-26, compared with Rs 23.85 crore used in the period labelled Mar-26. Purchases of investments were Rs 99.48 crore, exceeding investment redemptions of Rs 19.35 crore, while purchases of fixed assets were Rs 9.11 crore. Cash and cash equivalents nevertheless increased by Rs 29.85 crore during Sep-26 to Rs 394.72 crore.

What do Muthoot Capital’s debt and security disclosures show?

Muthoot Capital reported a debt-to-equity ratio of 4.91 at September 30, 2026, compared with 4.94 at March 31, 2026 and 4.56 at September 30, 2025. Total debts to total assets were 0.81 at September 30, unchanged from June 30, 2026, and below 0.82 at the March 2026 year-end. Net worth was Rs 682.75 crore, up from Rs 670.42 crore at March 31.

The filing states that all secured NCDs aggregating Rs 1,373.01 crore were fully secured by a pari-passu charge on assets. It also states that secured listed NCDs had security cover of 100% or higher under their term-sheet conditions, with total security cover of 1.23 times principal and interest wherever applicable. Finance costs for the half year ended September 30, 2026 were Rs 158.80 crore, compared with Rs 156.48 crore in the prior-year half.

Asset-quality measures improved from the March year-end but rose from the June quarter. Gross non-performing assets, including interest accrual, were Rs 160.11 crore, or 4.81% of advances, at September 30, compared with Rs 233.10 crore, or 6.96%, at March 31. Net non-performing assets were Rs 92.81 crore, or 2.85% of advances net of Stage 3 provision, compared with Rs 133.90 crore, or 4.12%, at March 31.

Conclusion

Muthoot Capital’s September 2026 filing shows a change in funding composition rather than a substantial increase in the loan book. Debt securities and deposits rose by a combined Rs 234.59 crore, while borrowings other than debt securities fell by Rs 193.58 crore and loans increased by Rs 9.51 crore. Positive operating cash flow of Rs 76.22 crore and a Rs 29.85 crore rise in cash and cash equivalents accompanied that shift.

The next disclosed matter to watch is the periodic expected credit loss, or ECL, model review. Muthoot Capital reported an additional management overlay of Rs 25.17 crore at September 30, 2026 and an additional provisioning buffer of Rs 2.50 crore for that upcoming review. Its board-approved policy provides for 50% provisioning on credit-impaired assets and seeks net non-performing assets below 6%.