Shares of Muthoot Finance Ltd. slumped further on Friday, April 11, falling 6.20% to ₹2,007.35 in early trade, adding to Wednesday’s sharp 6.66% drop. With Thursday being a market holiday, the two-day slide amounts to a steep 14.9% erosion in investor wealth, triggered by heightened regulatory concerns.
The sharp selloff follows the Reserve Bank of India’s (RBI) release of draft guidelines tightening rules around gold-backed lending—a core business for Muthoot. The proposed norms include capping the loan-to-value (LTV) ratio at 75%, restricting bullet repayment loans to a 12-month tenure, and requiring NBFCs to implement internal caps on their gold loan portfolios.
Brokerage reactions reflect uncertainty. Kotak Institutional Equities downgraded the stock to “add” from “buy,” slashing its price target to ₹2,250 from ₹2,400, and reducing earnings estimates by 10%. The brokerage cited concerns over growth and margin pressure due to the new draft framework.
Jefferies, on the other hand, maintained its bullish view, calling the norms “not as harsh as feared,” and kept its ₹2,615 target intact. Morgan Stanley retained an “equalweight” stance but warned of near-term pressure stemming from the regulatory overhang.
Muthoot Finance, with a market capitalization of ₹825.01 billion, is currently trading close to the lower end of its 52-week range. The stock remains under watch, with volatility likely to persist until final regulatory clarity emerges.
Disclaimer: The information provided is for informational purposes only and should not be considered financial or investment advice. Stock market investments are subject to market risks. Always conduct your own research or consult a financial advisor before making investment decisions. Author or Business Upturn is not liable for any losses arising from the use of this information.
