Shares of Muthoot Finance plunged 12 per cent on Friday as investors reacted cautiously to its latest quarterly earnings, even after the gold loan lender reported a sharp rise in profit.
The stock ended 12 per cent lower at 3,586.10, hitting a low of ₹3,552.70 from the previous close of ₹4,066.90. The decline put the stock on track for its steepest single-day percentage fall since August 2022, with market participants questioning the durability of the reported earnings spike.
It reported a two-fold year-on-year rise in consolidated net profit for Q3FY26 at ₹2,823 crore. Brokerages noted that while earnings were boosted, sequential core margins softened and active customer additions slowed, raising concerns about underlying momentum.
Analysts at Motilal Oswal Financial Services said operating performance remained strong, driven by continued gold loan growth and higher earnings supported by recoveries and auctions of pledged gold. Excluding recoveries, they assessed earnings as broadly in line with expectations, noting stable margins and improved asset quality as legacy NPA customers repaid loans. The brokerage expects favourable demand conditions, supported by limited availability of unsecured credit, to sustain loan growth and maintained a neutral rating with a revised target price of ₹4,500.
Nuvama Institutional Equities, however, highlighted stronger-than-expected loan growth and profitability metrics, pointing to robust expansion in AUM, improvement in margins and declining credit costs. It observed that recoveries formed a larger share of net interest income but added that core income also grew sequentially and that subsidiary contributions to gold lending were increasing. Citing the lender’s ability to maintain yields amid competition and supportive regulatory conditions for branch expansion, the brokerage retained a buy recommendation at a ₹4,700 target price.
The sharp market reaction underscores investor caution over the quality and sustainability of earnings drivers, even as brokerages remain divided between concerns about one-off income contributions and optimism about the structural demand outlook for gold loans.
Published on February 13, 2026