Muthoot & Manappuram Stocks Hit Record Highs in 2025

Gold Financiers Shine as Shares Hit Record Highs

Shares of leading gold finance companies, Muthoot Finance and Manappuram Finance, reached all-time highs in Wednesday's trading session, rallying up to 5.5% on the BSE. This surge was fueled by expectations of strong earnings, driven by a rally in gold prices and robust loan demand. While Manappuram Finance surged 5.5% to a new peak of ₹310.75, Muthoot Finance gained 2% to touch ₹3,887.65. Their performance significantly outpaced the broader market, with the BSE Sensex showing a modest gain of 0.18%. Year-to-date in 2025, Muthoot Finance has delivered an impressive 82% return, while Manappuram Finance has soared by 65%, compared to the Sensex's 9% rise.

Key Drivers Behind the Stock Rally

Several key factors are contributing to the bullish sentiment surrounding gold financiers. A primary driver is the record high price of spot gold, which touched $1,439 per ounce amid growing prospects of a US interest rate cut. This rally has been further supported by increased safe-haven demand following geopolitical tensions. Domestically, the Reserve Bank of India's tighter norms on unsecured credit have created a significant tailwind. As lenders ration unsecured personal loans, a growing number of borrowers are turning to gold loans as a reliable and accessible source of funding. This shift has directly benefited established players like Muthoot and Manappuram, channeling strong demand toward their core business.

Muthoot Finance Delivers Exceptional Quarterly Performance

Muthoot Finance reported a stellar performance for the second quarter of FY26, reinforcing investor confidence. The company's standalone net profit surged by an impressive 87.45% year-on-year (YoY) to ₹2,345.20 crores. For the half-year ending September 2025, standalone profit after tax jumped 88% YoY to ₹4,391 crores. This profitability was backed by strong business growth, with standalone loan assets under management (AUM) growing 47% YoY to a record high of ₹1,32,305 crores. The company's net interest income (NII) for the quarter also saw a substantial 58.5% YoY increase to ₹3,991 crores, reflecting healthy spreads and a decline in the cost of funds.

Upgraded Guidance Signals Strong Momentum

Buoyed by its strong performance and a favorable market environment, Muthoot Finance's management significantly upgraded its gold loan AUM growth guidance for the financial year 2026. The guidance was raised from an earlier projection of 15% to a much more optimistic range of 30-35%. Managing Director George Alexander Muthoot attributed this revision to favorable regulatory changes, higher gold prices, and the clampdown on unsecured credit, all of which are expected to boost gold loan demand. The company also maintained a high operating profit margin of 84.9%, showcasing its operational efficiency. To support future growth, the board has approved a plan to raise ₹35,000 crore through Non-Convertible Debentures (NCDs).

Manappuram Finance Focuses on Gold Loan Growth

Manappuram Finance is also capitalizing on the favorable industry trends. According to analysts, the company is focused on accelerating growth in its core gold loan portfolio. This growth is expected to be driven by an increase in average ticket sizes and strong new customer additions. While the company's non-gold portfolio is undergoing a period of consolidation to improve profitability and asset quality, its primary focus remains on strengthening its position in the gold loan market. Analysts at Axis Direct noted that while aligning gold loan yields with peers might put some pressure on Net Interest Margins (NIMs), this would likely be offset by a declining cost of funds, allowing the company to maintain stable margins.

Analyst Views and Positive Sector Outlook

Brokerage firms have responded positively to the performance of gold financiers, particularly Muthoot Finance. Motilal Oswal Financial Services, while maintaining a 'Neutral' rating, raised its target price for Muthoot to ₹3,800, citing its industry-leading growth and best-in-class profitability. The firm highlighted that Muthoot is a prime beneficiary of the rise in gold prices and the industry-wide rationing of unsecured credit. Similarly, Nuvama increased its target price to ₹4,000, praising the company's strong earnings and its ability to protect loan yields from rising competition. Bernstein maintained an 'Outperform' call with a target of ₹3,400.

The Structural Opportunity in India's Gold Loan Market

The outlook for India's gold loan industry remains robust. The market is projected to double in value by FY2029, driven by the formalization of the economy and a shift from the unorganized to the organized lending sector. Manappuram Finance's annual report noted that the organized sector's market share is expected to grow from 37% to over 50% by FY29. India's vast household gold reserves, estimated at over 25,000 tonnes, represent a massive, under-monetized asset. With only a fraction of this gold currently pledged for loans, the potential for long-term structural growth is immense.

Conclusion: Riding a Wave of Favorable Conditions

Muthoot Finance and Manappuram Finance are well-positioned to capitalize on a confluence of favorable factors. Record-high gold prices, a regulatory push away from unsecured lending, and strong underlying consumer demand create a powerful growth engine for the sector. Muthoot's exceptional Q2 results and upgraded guidance underscore its market leadership and operational strength. As both companies continue to focus on their core gold loan business while prudently expanding other segments, they remain key players in India's evolving credit landscape.