Jefferies has maintained its buy rating on Muthoot Finance with a target price of ₹4,000 per share after the company delivered a strong Q2FY26 performance well ahead of its estimates.
Profit after tax rose 87% YoY to ₹23.4 billion, exceeding Jefferies’ estimate of ₹19 billion, supported by strong core NII and sizeable income writebacks from NPA recoveries of around ₹3–3.5 billion.
Standalone AUM grew 47% YoY (10% QoQ), slightly below expectations due to lower loan-to-value (LTV) utilisation, though underlying demand remained strong. Core NIMs expanded sequentially while gross NPAs declined, reflecting improved portfolio performance.
Jefferies said favourable gold price momentum, combined with a comfortable LTV buffer, positions the company to deliver a 25% AUM CAGR over FY25–27. It expects NIMs to expand further and credit costs to ease as recoveries remain healthy. The brokerage forecasts 36% EPS CAGR with return on equity above 24% over FY26–27.
Disclaimer: The views and recommendations above are those of Jefferies. Business Upturn does not endorse them. Please consult a financial advisor before making investment decisions.
