Muthoot Finance Q3 FY26: Profit Up 95%, Stock Down

What moved the stock

Muthoot Finance Ltd (NSE: MUTHOOTFIN) saw sharp price action around its FY26 results despite strong headline growth. In one session, the stock moved up 0.41% from a previous close of ₹3,419.20 to trade at ₹3,433.00. But the broader reaction to earnings was risk-off, with reports of a steep single-day fall and a weaker five-day trend.

On February 16, the stock was reported trading at ₹3,502.00, down 2.35% intraday and down 7.47% over five sessions. Even after the pullback, it remained up 56.07% over the past year, pointing to a correction after a strong run.

The Q3 drop despite a near-doubling in profit

Reuters reported that Muthoot Finance shares dropped more than 12% on Friday, described as the steepest one-day percentage decline in three-and-a-half years. The stock was down 12.3% at ₹3,566.50 by 11:23 a.m. IST, while the Nifty 50 was down 1.02%. Another report pegged the stock down 11.52% at ₹3,600.15 during trade.

This sell-off came a day after the company posted a near doubling of quarterly profit. Consolidated profit after tax (PAT) for Q3 FY26 was reported at ₹2,656 crore, compared with ₹1,363 crore a year earlier, a 95% year-on-year increase. Net interest income (NII) for the quarter was reported at ₹4,467 crore, up 64% year-on-year.

What brokerages and analysts flagged

Broker commentary cited in Reuters pointed to the composition of earnings as a key market concern. Ambit Capital said about ₹640 crore of earnings came from interest income recovered from non-performing loans, which it described as non-recurring. The brokerage added that, adjusting for this, earnings were largely in line with estimates and that valuations “leave no margin of error.”

Jefferies said core net interest margins fell about 70 basis points sequentially, even as reported margins improved due to recovery-related income. Jefferies also flagged a 1% sequential decline in active customers and lower loan-to-value ratios amid a spike in gold prices. CLSA described it as “another strong quarter,” citing robust loan growth and stable operating costs, but noted slower customer additions and a sequential dip in gold tonnage.

FY26 so far: AUM expansion and profit growth

For the nine months ended December 31, 2025, Muthoot Finance reported record loan assets under management (AUM) and higher profitability across businesses. Consolidated loan AUM rose 48% year-on-year to ₹1,64,720 crore as of December 31, 2025. Standalone loan AUM was reported at ₹1,47,552 crore as of the same date, up 51% year-on-year.

Consolidated profit after tax for 9M FY26 increased 84% year-on-year to ₹7,209 crore. Standalone profit after tax rose 91% year-on-year to ₹7,048 crore. The company’s commentary in the provided material attributed growth to higher gold loan volumes, increased disbursements to new customers, and expansion in subsidiary businesses.

Market view: sustainability versus headline numbers

A market expert quoted in the provided text said the correction reflected concerns beyond headline profit growth. The expert argued that investors focused on sustainability because a meaningful portion of the earnings boost came from recovery-related gains, alongside sequential pressure on core margins and a slowdown in additions of active customers. With the stock having rallied strongly in the preceding months, profit-taking after results was also cited as a factor.

The same commentary added that “momentum remains weak” while the stock stays below ₹3,750. Separately, broker targets were described as mixed, with target prices ranging between ₹3,715 (reduce) and ₹4,750 (buy), and multiple firms assigning hold or neutral ratings.

Trading session details and relative performance

One report described a gap-down open on February 13, 2026, with the stock opening at ₹3,662.1 and marking an intraday low representing a 10.0% decline from the prior close. It also noted high volatility based on the weighted average price and that the day marked a reversal after five consecutive days of gains.

On the same day, the Sensex fell 0.82%, while Muthoot Finance was reported down 9.51%, underperforming NBFC sector peers by 9.16%. Over the past month, the stock was reported down 6.23% compared with a 0.76% decline in the Sensex.

Key numbers at a glance

Why this matters for investors tracking gold-loan NBFCs

The episode highlights how markets can re-rate results based not just on profit growth but on what drives it. Recovery-led income can lift reported profitability, but investors and analysts often separate such items from recurring earnings when evaluating durability. The commentary also shows sensitivity to operating indicators like margins, customer additions, and loan-to-value dynamics during periods of volatile gold prices.

At the same time, the company’s AUM growth and FY26-to-date profit expansion remain key datapoints for the sector, especially for investors comparing growth and profitability across gold-loan focused NBFCs.

What to watch next

Near-term focus is likely to remain on whether core margins stabilise, how customer additions track in subsequent quarters, and how much of quarterly profitability comes from recoveries versus ongoing lending spreads. Investors will also watch how the stock behaves versus the broker target band of ₹3,715 to ₹4,750 as fresh estimates and views get published following the results.