Muthoot Microfin Limited reports 22% AUM growth in Q2 FY27

Muthoot Microfin Limited reported 22% year-on-year growth in assets under management to ₹15,323 crore for Q2 FY27, supported by ₹2,900 crore of disbursements, stronger collection efficiency and a reduction in its cost of funds to 9.93%.

What did Muthoot Microfin report for Q2 FY27?

Muthoot Microfin reported a broad improvement in operating indicators for the quarter ended 30 September 2026. Assets under management, or AUM, reached ₹15,323 crore, up 22% from the year-ago quarter. On an annualised quarter-on-quarter basis, AUM growth was 23.9%.

Disbursements during the quarter stood at ₹2,900 crore, rising 28% year-on-year and 10% sequentially. The reported update also showed a higher collection efficiency, an expanding digital collection mix and lower borrowing costs. The figures are provisional and unaudited, subject to statutory auditor review and approval by the Audit Committee and Board of Directors.

How did lending, collections and digital payments change?

Muthoot Microfin's collection efficiency improved to 98.11%, an increase of 477 basis points from Q2 FY26. Collection efficiency excluding advances was reported at 99.9%, indicating that scheduled repayments formed a large part of the reported collection performance during the quarter.

Digital collections accounted for 47% of total collections, compared with 25% a year earlier and 40% in Q1 FY27. Cumulative downloads of the Mahila Mitra app reached 22 lakh. The company operated 1,675 branches and served 32 lakh active customers as of 30 September 2026, reflecting the scale of its rural-focused microfinance network.

The company also reported portfolio diversification through its Small and Micro Enterprise Individual Loan portfolio, which stood at ₹4,164 crore. Gold loan disbursements under its referral and co-lending model were ₹453 crore. These figures provide context on lending products beyond its core micro-loan offering to female customers in rural India.

What happened to Muthoot Microfin's funding costs and liquidity?

Muthoot Microfin reduced its cost of funds by 20 basis points sequentially to 9.93% in Q2 FY27 from 10.13% in Q1 FY27. This was the first reported quarter in which the company's cost of funds entered single-digit territory. Its incremental cost of funds improved to 9.69% from 9.80% in the preceding quarter.

The company raised ₹3,213 crore during the September quarter, taking its borrowings raised in the first half of FY27 to ₹5,946 crore. It reported liquidity of ₹1,701 crore and unavailed sanctioned credit lines of ₹4,328 crore as of 30 September 2026. These funding metrics are relevant for a lender because disbursement growth depends on continued access to borrowing lines and disciplined funding costs.

Why did the Q2 FY27 update matter to investors?

The Q2 business update combined growth in AUM and disbursements with better collections and lower funding costs. For a microfinance lender, these measures track portfolio expansion, repayment behaviour and the cost of financing loans. Muthoot Microfin's 22% AUM growth and 28% disbursement growth were accompanied by a 477-basis-point improvement in collection efficiency.

The equity market reacted positively to the business update released on 8 October 2026. Shares of Muthoot Microfin opened almost 4% higher that day after the company reported the AUM and disbursement data. The share-price move reflected the immediate market response to the announced operating metrics, while the provisional nature of the figures remains important until the formal financial results are reviewed.

Muthoot Microfin was founded in April 1992 and is a subsidiary of Muthoot Pappachan Group. Its business focuses on micro-loans for female customers, particularly in rural regions. Consequently, collection performance, credit costs, local operating conditions and the availability of funding are key indicators for investors following its business performance.

When will Muthoot Microfin discuss the quarterly results?

Muthoot Microfin is scheduled to hold an investor and analyst conference call on 6 November 2026 to discuss its Q2 FY27 results. Chairman Thomas Muthoot and Chief Executive Officer Sadaf Sayeed are among the senior executives expected to participate, according to the announced call details.

The company has also indicated that Q2 and H1 FY27 financial results are expected on 5 November 2026. The formal result announcement and subsequent conference call will provide management's discussion of quarterly performance and outlook. Investors can compare the reported financial statements with the earlier business update, including AUM, collections, disbursements and funding indicators.

Conclusion

Muthoot Microfin's Q2 FY27 business update showed AUM of ₹15,323 crore, disbursements of ₹2,900 crore, collection efficiency of 98.11% and a 9.93% cost of funds. Together, the reported numbers point to stronger lending activity, improved collections and lower funding costs during the September quarter.

The next disclosed events are the expected Q2 and H1 FY27 results on 5 November 2026 and the investor conference call on 6 November 2026. Investors will watch for the audited review process and management's commentary on the operating and funding metrics reported in the provisional update.