Muthoot Finance falls 10% despite strong Q3 FY26

Stock under pressure despite upbeat earnings

Muthoot Finance shares came under sharp pressure in trade on February 13, even as the gold-loan lender reported a strong set of Q3 FY26 numbers a day earlier. The stock fell nearly 10% intraday amid heavy volatility right after the opening bell. Selling pressure was visible from early trade, reflecting a negative market reaction despite a sharp rise in profit and operating income.

The company had announced its third-quarter results for FY26 on February 12. Headline earnings pointed to strong momentum across profit, net interest income (NII), and loan growth. Yet, the stock market response was clearly cautious.

Intraday move: open, high, and low levels

On the BSE, Muthoot Finance opened at ₹3,927 and traded in a wide range through the session. The stock hit an intraday high of ₹4,000 and fell to an intraday low of ₹3,576.60.

On the NSE, the share opened at ₹3,870, lower than the previous close of ₹4,066.90. At around 10 AM, it was trading at ₹3,599.10, down 11.50%.

Q3 FY26 profit nearly doubles year-on-year

Muthoot Finance reported a sharp jump in Q3 FY26 profitability. Standalone net profit rose to ₹2,656 crore from ₹1,363 crore in Q3 FY25, translating into year-on-year growth of 94.9%.

For the first nine months of FY26, consolidated profit after tax (PAT) climbed to ₹7,209 crore versus ₹3,908 crore in the corresponding period of the previous year, up 84% year-on-year. On a standalone basis, 9M FY26 PAT rose 91% year-on-year to ₹7,048 crore from ₹3,693 crore.

Net interest income growth stays strong

Operating performance also strengthened, led by a jump in net interest income. Q3 FY26 NII rose to ₹4,467 crore from ₹2,721 crore in Q3 FY25, a 64% year-on-year increase.

On a sequential basis, total NII grew 12% quarter-on-quarter, while core NII grew 4% quarter-on-quarter. The company also reported a stronger recovery contribution to NII, rising to ₹620 crore versus ₹300 crore in the previous quarter.

AUM climbs to ₹1,64,720 crore on gold-loan demand

Loan growth remained a central feature of the quarter. Consolidated loan assets under management (AUM) stood at ₹1,64,720 crore as of December 31, 2025, compared with ₹1,11,308 crore in December 2024, marking 48% year-on-year growth.

Quarter-on-quarter, AUM increased from ₹1,47,673 crore in September 2025 to ₹1,64,720 crore in December 2025. This was a sequential increase of ₹17,046 crore, or 12% quarter-on-quarter.

Standalone loan AUM reached ₹1,47,552 crore, reflecting 51% annual growth. Gold loan AUM touched ₹1,39,658 crore by December-end, up 50% year-on-year.

What drove the Q3 performance

The company’s earnings growth was supported by higher gold loan growth and strong interest income. Interest recoveries also contributed to NII. Operating expenses were described as stable sequentially after adjusting for a one-off labour code-related expense impact.

The one-time labour code impact was ₹48 crore. Excluding this, total operating expenses were reported as flat sequentially, pointing to operating leverage as revenue rose faster than costs.

Why did the stock fall despite strong results?

The decline raised a key question for investors: how can a stock fall sharply when profit growth is near 95% and AUM growth is close to 50%? The factors cited around the market move included expectations already priced into the stock, short-term positioning, profit booking after a run-up, and broader sentiment shifts.

There was also mention of lower loan-to-value ratios (LTV) and a quarter-on-quarter decline in gold tonnage, even though overall AUM growth stayed robust. Broker commentary also flagged that standalone AUM came in slightly below estimates due to these factors.

Guidance and brokerage views

Managing Director George Alexander Muthoot said the company raised its FY26 annual growth guidance to 44%–45% from an earlier revised estimate of 30%–35%, citing strong demand and improved regulatory clarity in the gold loan segment.

Brokerages retained positive views despite the stock’s drop. Jefferies maintained a Buy rating with a target price of ₹4,750. CLSA retained an Outperform rating with a target price of ₹4,600 and noted that Q3 FY26 NII, PPOP and PAT exceeded its estimates by 6%–8%. Nuvama reiterated its Buy rating and raised its target price to ₹4,700 from ₹4,000.

Key numbers at a glance

Background: FY25 also saw record metrics

Earlier, in FY25, the company reported consolidated loan AUM of ₹1,22,181 crore, up 37% year-on-year from ₹89,079 crore. Consolidated profit after tax for FY25 rose 20% year-on-year to ₹5,352 crore from ₹4,468 crore.

This context matters because recent quarters have shown strong growth in AUM and profitability, which can raise market expectations and influence how investors react to results.

Conclusion

Muthoot Finance delivered strong Q3 FY26 growth across profit, NII, and AUM, with consolidated AUM at ₹1,64,720 crore and standalone profit up nearly 95% year-on-year. Despite that, the stock fell sharply on February 13 amid volatility and selling pressure. The next key datapoint for investors will be how the company tracks its updated FY26 growth guidance of 44%–45% and whether operational trends like LTV and tonnage stabilise in subsequent quarters.