Muthoot Finance Ltd.
Q4 FY25
Call date · May 14, 2025
1 · Management Commentary
Key Positives
- Achieved highest ever consolidated loan AUM of Rs.1,22,000 crores as of March 2025, with YoY growth of Rs.33,000 crores (37%).
- Consolidated PAT at Rs.5,352 crores, up 20% YoY; standalone PAT at Rs.5,200 crores, up 28% YoY.
- Gold loan AUM crossed Rs.1,00,000 crores milestone, reaching Rs.1,02,956 crores (41% YoY growth).
- Dividend declared at 260% of face value (Rs.26 per share).
- Opened 850 new branches during the year.
- S&P and Moody’s upgraded long-term issuer ratings to BB+ (stable) and BA1 (stable), respectively.
- Subsidiaries showed strong growth: Muthoot Home Finance AUM up 47%, Muthoot Money AUM up 248%.
- iMuthoot App downloads reached 1.5 crores.
Key Negatives
- Elevated credit costs and provisions, particularly in non-gold loan and personal loan segments.
- Stage-III loan assets at 4.98% in Belstar Microfinance, reflecting sectoral stress.
- Operational and compliance costs expected to rise due to regulatory changes and increased oversight.
Forward Guidance
- Maintains conservative gold loan AUM growth guidance at 15% for FY26, with potential revision post-Q2.
- Capex: 115 new branches approved for Muthoot Finance; Muthoot Money at ~1,000 branches, further expansion possible with RBI approval.
- No major shift in business mix; gold loans remain core focus.
- Will comply with final RBI gold loan guidelines; expects harmonization but flags concerns on LTV restrictions.
- Interest spread to be maintained at 9–10%; any reduction in borrowing costs to be passed to customers.
- Continued investment in analytics and digital initiatives to drive customer acquisition and branch productivity.
2 · Q&A Highlights
Q 1 (Gold Loan Growth & Competitive Landscape): How does management view gold loan growth prospects and competition for FY26?
A (Management):
• Maintains 15% growth guidance for gold loan AUM; market is expanding with more players and increased monetization of gold by customers.
• Competition is healthy as the overall pie is growing.
Q 2 (RBI Draft Guidelines & LTV Impact): What is the expected impact of draft gold lending guidelines, especially LTV requirements?
A (Management):
• Awaiting final guidelines; flagged concerns that LTV tweaks may disadvantage NBFCs and push customers back to unorganized sector.
• Current average LTV is below 62%; compliance costs will rise, but will adapt as required.
Q 3 (Asset Quality & Credit Costs): What is the breakdown of Stage-III assets and drivers of elevated credit costs?
A (Management):
• Stage-III on gold loan: ~Rs.3,400 crores; non-gold: ~Rs.300 crores.
• Total impairment for FY25: Rs.766 crores (Rs.130 crores write-off, rest mainly due to gold loan book growth).
• Non-gold NPA increase is largely one-off due to personal loan segment; collection mechanisms being stabilized.
Q 4 (Branch Expansion): What are the plans and regulatory status for branch expansion in Muthoot Finance and Muthoot Money?
A (Management):
• 115 new branches approved for Muthoot Finance; Muthoot Money at ~1,000 branches, further expansion possible with RBI approval.
• No current constraints on branch growth.
Q 5 (Yield, Spread & Cost of Funds): How will yields, spreads, and cost of funds evolve amid competition and rate changes?
A (Management):
• Interest spread to be maintained at 9–10%; Q4 gold loan yield at 18.5%.
• Cost of funds expected to decline post-March; any reduction will be passed to customers, but impact on ROA will be limited.
Q 6 (Business Mix & Non-Gold Lending): Any plans to shift business mix toward non-gold lending?
A (Management):
• No major change planned; gold loans remain core business.
Q 7 (Subsidiary Performance & Asset Quality): Updates on Belstar, Muthoot Home Finance, and Muthoot Money?
A (Management):
• Belstar: Stage-II at 3.17%, Stage-III at 4.98%; profit after tax Rs.46 crores.
• Muthoot Home Finance: AUM Rs.2,985 crores, GNPA 1.1%, NNPA 0.46%.
• Muthoot Money: AUM Rs.3,903 crores, gold loan AUM Rs.3,500–3,700 crores, branch network at 992–1,000.
Q 8 (Digital & Analytics Initiatives): What is the status of analytics and digital initiatives?
A (Management):
• Ongoing implementation to improve branch performance and customer acquisition; expected to drive higher footfalls and business.
3 · Other Key Numbers
- Consolidated loan AUM: Rs.1,22,000 crores (March 2025)
- Consolidated PAT: Rs.5,352 crores (FY25)
- Standalone AUM: Rs.1,08,000 crores
- Standalone PAT: Rs.5,200 crores (FY25)
- Gold loan AUM: Rs.1,02,956 crores (FY25)
- Dividend: 260% of face value (Rs.26 per share)
- New branches opened: 850 (FY25)
- iMuthoot App downloads: 1.5 crores
- Belstar Finance: 57 new branches, AUM Rs.7,970 crores, PAT Rs.46 crores, Stage-III 4.98%
- Muthoot Home Finance: AUM Rs.2,985 crores, GNPA 1.1%, NNPA 0.46%, PAT Rs.39 crores
- Muthoot Money: AUM Rs.3,903 crores, gold loan AUM Rs.3,500–3,700 crores, PAT Rs.12 crores
- Asia Asset Finance: 72% stake, PAT LKR 44 crores, AUM LKR 3,133 crores
- Muthoot Insurance Brokers: Premium collection Rs.589 crores, PAT Rs.166 crores
- Auctioned gold loans: Rs.461 crores (FY25, principal amount)
- Interest accrued: Rs.1,740 crores
- Gold loan ticket size mix: >Rs.3 lakhs (38%), Rs.1–3 lakhs (35%), Rs.50,000–1 lakh (15%), <Rs.50,000 (13%)
- Write-offs: Rs.130 crores (FY25)
- ECL provision: Rs.766 crores (FY25)
- Q4 gold loan yield: 18.5%
- Interest spread: 9–10%
- Cost of funds: Post-March, significant drop observed
- Belstar Stage-II: 3.17%, Stage-III: 4.98%
- Muthoot Money non-gold AUM: Rs.150 crores (March 2025)
- Auctioned gold loans (FY25): Rs.461 crores (principal)
- New customer additions per quarter: ~4 lakh
All figures as stated in the call. Where not disclosed, marked as such.