Muthoot Finance share price zooms over 6% to 52-week high after Q3 results 2025. Should you buy amid rising gold prices?

Muthoot Finance share price jumped over 5% in early trade on Thursday after the company reported strong Q3 results. Muthoot Finance shares rallied as much as 6.45% to a fresh 52-week high of ₹2,321.80 apiece on the BSE.

Gold loan financier Muthoot Finance reported a net profit of ₹1,363 crore for the third quarter of FY25, registering a growth of 32.7% from ₹1,027.3 crore in the same period last year, led by strong loan growth and margin expansion.

The company’s net interest income (NII) in Q3FY25 increased 42.8% to ₹2,721.4 crore from ₹1,905.7 crore, year-on-year (YoY). Calculated net interest margin (NIM) expanded by 69 basis points (bps) YoY and 9 bps QoQ to 11.6%.

Credit costs stood at 0.89% in Q3FY25 as against 0.94% in Q2FY25 and 0.08% in Q3FY24.

The company reported its highest ever consolidated loan assets under management (AUM) at ₹1.11 lakh crore, as on December 31, 2024. During the quarter, Consolidated Loan Assets Under Management increased by ₹7,159 crore, i.e., an increase of 7% QoQ.

“We have tempered disbursements in response to challenges faced in microfinance sector, and our focus continues to be on strengthening collections and enhancing quality of loan book. We are closely monitoring the industry situation, and we see this as a transitionary issue, and expect it to get to be resolved in the next couple of quarters,” said George Alexander Muthoot, Managing Director, Muthoot Finance.

Should you buy Muthoot Finance shares?

Brokerage firm Nirmal Bang expects Muthoot Finance’s standalone net profit to clock a CAGR of 19.8% over FY24-FY27, led by 18% CAGR in Gold Loan, stable margins and lower credit costs.

This is expected to lead to RoA and RoE of 5.1% and 19.2% in FY27E. Its AUM estimates are based on the assumptions of value growth impact of 8.3% CAGR in 22 carat gold prices, 6.2% CAGR in tonnage and 9% CAGR in client addition.

Nirmal Bang maintained its ‘Buy’ rating on Muthoot Finance shares and raised the SOTP-based target price to ₹2,589 from ₹2,582 earlier.

According to Motilal Oswal Financial Services Muthoot Finance reported strong gold loan growth, aided by gold tonnage growth and stronger customer additions. However, provisions were slightly higher than expected (primarily due to a continued increase in absolute Stage 3) while NIMs and spreads improved sequentially.

“With a favorable demand outlook for gold loans driven by reduced competition from banks and limited availability of unsecured credit, the company is well positioned to maintain its strong loan growth momentum. We believe that the positives are already factored in its valuations of 2.2x FY27E P/BV,” Motilal Oswal said.

The brokerage firm reiterated its ‘Neutral’ rating and raised Muthoot Finance share price target to ₹2,300 apiece.

At 9:40 AM, Muthoot Finance shares were trading 6.28% higher at ₹2,318.00 apiece on the BSE.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.