The stock market can be a cruel teacher, and today, Muthoot Finance learned that even record-breaking numbers are not always enough to satisfy investors. In a move that left many traders scratching their heads, the Muthoot Finance share price plummeted by up to 14% during Friday’s trading session.
What makes this crash particularly jarring is the timing. Just hours prior, the gold loan giant had posted a stellar Q3 FY26 result, reporting that its standalone net profit had nearly doubled. So, why did the market hit the panic button?
Record Profits vs. Red Tickers
On the surface, Muthoot’s scorecard for the December quarter was nothing short of brilliant. The company reported a standalone net profit of ₹2,656 crore, a staggering 95% increase year-on-year.
Key Q3 Performance Highlights:
- Net Interest Income (NII): Surged 64% to ₹4,467 crore.
- Consolidated AUM: Crossed the historic ₹1.5 trillion milestone.
- Gold Loan Portfolio: Grew 50% YoY to ₹1.39 lakh crore.
- Guidance Upgrade: Management raised its FY26 growth guidance to 44-45%.
Despite these “upbeat” figures, the NBFC sector heavyweight saw its stock price tumble to an intraday low of ₹3,577 on the BSE.
Tonnage Dips and Margin Pressures
If the profits were so high, why the sell-off? Expert analysts point to a few “hidden” metrics that the market didn’t like.
- Gold Tonnage Decline: While the value of the loans went up (fueled by high gold prices), the actual gold tonnage, the physical weight of gold pledged, saw a 2% sequential decline. This suggests that growth is driven more by gold price appreciation than by an influx of new physical collateral.
- Slowing Customer Acquisition: The December quarter saw a noticeable slowdown in new customer additions. For a growth-oriented company, this raised a red flag for long-term scalability.
- Core Margin Compression: Although profits were high, core Net Interest Margins (NIMs) showed slight moderation. In the competitive world of gold loan NBFCs, any sign of margin pressure can trigger a quick exit by institutional investors.
Should You Buy the Dip or Stay Away?
Despite the immediate carnage on the charts, major brokerages remain surprisingly bullish. Jefferies has maintained a ‘Buy’ rating with a target of ₹4,750, while CLSA and Nuvama have also issued optimistic outlooks. They argue that the company’s business model remains resilient and that the massive profit jump proves Muthoot is still the “gold standard” in its category.
For the average investor, this Muthoot Finance stock crash serves as a reminder: the market doesn’t just trade on today’s profit; it trades on tomorrow’s sustainability.
