Muthoot Microfin Ltd

Price story Before the numbers, the tape. A stock price moves through four repeating seasons: a flat base (stage 1), an advance (2), a top (3), a decline (4). Where the price sits in that cycle frames everything below.

Muthoot Microfin Ltd trades at ₹196, in a confirmed uptrend and 18 weeks into that stage. That is +0.7% against its own 200-day average. It sits at 49% of a 52-week range of ₹146 to ₹250. On relative strength it is currently behind the NIFTY 500 on a trailing-13-week view (1 week and counting).

Today the stock is in a confirmed uptrend — week 18 of stage 2, confirmed. At ₹196 it trades +0.7% versus its 200-day average and sits at 49% of its 52-week range (₹146–₹250).

Against the market, two honest reads. Cumulative: over the last 2.7 years the stock moved −22% while the NIFTY 500 moved +18% — behind the index over the full window. Recent form: on a trailing-13-week view the stock is currently behind (1 week and counting; last ahead the week of 2026-09-04) — the ribbon below is that same metric, week by week.

What would end the trend, mechanically: two Friday closes in a row below the 200-day line. That is the exit rule — no debates.

Story check

Muthoot Microfin Ltd's story is not scored yet against the markers our research file set on 22 August 2026. Where it sits in its own cycle: RIDING_WAVE_EPS_LED. Our fortnightly research layers last read it on 22 August 2026.

Our read, 22 August 2026. Microfinance turnaround executing: credit costs collapsed from 9.4% to 2.6%, AUM growing 18% year-on-year, CRISIL AA- upgrade opening cheaper funding, and the parent-enabled gold-loan engine scaling — all at 1.26 times book on a business whose ROE is heading toward 13-15%.

From the numbers. The PE/PB cycle snapshot as of Aug 22 shows the stock in an expanding mid-stage with the matrix label of riding the wave — the PB has recovered from its 0.8 trough all the way back to the 1.4 prior peak, driven by four…

From the price. Price stage 2, week 18 — above its 200-day line, relative strength falling.

From the research. Microfinance turnaround executing: credit costs collapsed from 9.4% to 2.6%, AUM growing 18% year-on-year, CRISIL AA- upgrade opening cheaper funding, and the parent-enabled gold-loan engine scaling — all at 1.26 times…

🚨 Where they disagree. The PE/PB cycle snapshot as of Aug 22 shows the stock in an expanding mid-stage with the matrix label of riding the wave — the PB has recovered from its 0.8 trough all the way back to the 1.4 prior peak, driven by four consecutive quarters of improving earnings. The cycle setup is described as golden: PB expanding alongside accelerating EPS recovery, which is the pattern associated with the strongest re-rating outcomes. Institutional signal has improved from outright selling to mixed, with FIIs stabilizing near 23% and DIIs increasing their position. The stock is no longer cheap on a backward-looking historical PB basis, but the forward re-rating case rests on ROE doubling from 6.2% toward…

What is proven. Microfinance turnaround executing: credit costs collapsed from 9.4% to 2.6%, AUM growing 18% year-on-year, CRISIL AA- upgrade opening cheaper funding, and the parent-enabled gold-loan engine scaling — all at 1.26 times book on a business whose ROE is heading toward 13-15%.

🚨 What would change our mind. If the gross NPA ratio stops improving and reverses above 5% in any of the next two quarterly reports, or if the Q2 FY27 credit cost rises above 3.5%, the assumed credit-cost recovery would be a false dawn rather than a structural shift. Separately, if the individual loan book — currently showing near-zero delinquency across roughly Rs 3,200 Cr — starts reporting 30-day overdue rates above 2% as the portfolio doubles in scale, the zero-delinquency pillar of the diversification thesis would be…

Layer 1 read, 22 August 2026 — KEEP. Bad loans down four quarters and profit up five — the turn is real; shifting management targets cap it at P2. Muthoot Microfin lost Rs 401 Cr in the March 2025 quarter when small-borrower defaults swept the whole industry; since then quarterly profit has climbed every single quarter to Rs 81 Cr, and the loan losses that caused the damage have shrunk from 9.4% to 2.6% of the book with overdue loans down from 4.85% to 3.89% four quarters in a row. I checked the raw quarterly rows rather than trusting the headline: the lending profit itself (interest earned minus funding and loan-loss costs) went from Rs 16 Cr to Rs 116 Cr, so this is the actual lending business recovering, not a one-off gain. The stock costs 1.26 times its book value, which is cheap for a lender whose earnings are climbing, and the…

What would change Layer 1’s mind. The Timeline's line is that overdue loans reversing above 5% or credit cost above 3.5% would make the recovery a false dawn. Sharpened to this verdict: if the September 2026 quarter reports gross NPA ABOVE 3.89% — that is, the four-quarter improvement simply stops — the entire case, which rests on the direction of that one number, is gone and this becomes a DROP rather than a P2. The second trigger is the individual-loan book, Rs 3,200 Cr at near-zero delinquency today: any 30-day overdue rate…

Layer 2 read, 22 August 2026 — ADVANCE. Bad loans and credit costs are falling while sector supply and institutional interest remain scarce. Earnings per share improved through five quarters, bad loans fell for four quarters, and the latest call confirms credit cost fell again. The external capital block shows institutions absent and supply withdrawing, the exact IDEAL_TROUGH_SETUP [sector_capital_flows: Finance & Investments - Microfinance], so the DCF-based EXTREME MoS is overridden using the lender's 1.26x P/BV fact. Management's target drift remains a real cap, not a reason to reject the recovery.

What would change Layer 2’s mind. Flip ADVANCE to DROP if a coming quarter shows GNPA above 5% or credit cost above 3.5%, because that would show the new-book recovery and sector turn were false.

Layer 3 read, 22 August 2026 — BENCH. Loan quality is healing, but repeated target changes make this management unready for fresh capital. Bad loans improved across four reported quarters, and management said credit cost fell again, so the operating recovery mitigates Timeline R2. Hard P/BV is 1.26x, but the snapshot is ⚠ 1.4x at its 70th percentile; with Timeline R1's serial target revisions, this P2 stays on BENCH.

What would change Layer 3’s mind. A reported gross NPA above 5% in either of the next two quarters would flip BENCH to DROP because it would invalidate the asset-quality recovery.

The test written in advance. Management Credibility — Serial Target Revision Pattern — Management Credibility — Serial Target Revision Pattern by the next result.

The test written in advance. Sector Stress Re-ignition — Sector Stress Re-ignition by the next result.

What the company does. Muthoot Microfin lost Rs 223 Cr in FY25 when a sector-wide borrower default wave pushed credit costs to 9.4%. Q1 FY27 shows the reversal is real: PAT reached Rs 81 Cr, credit costs fell to 2.6%, AUM grew 18% year-on-year, and the CRISIL AA- upgrade opens mutual-fund and insurer funding at structurally lower costs. The stock trades at 1.26 times book on a business whose ROE should reach 13-15% in FY27 — still short of the 20% long-term target, but enough to justify a meaningful re-rating from the current multiple.

🚨 What the surface reading misses. The surface reading is: PB at 1.4 times and at the 70th percentile of its own history — the stock has re-rated significantly and is no longer cheap on a backward-looking basis. The research reads it further: The PB re-rating is earnings-led: ROE is recovering from the 6.22% stress level toward 13-15% in FY27. At 6.22% ROE versus a 14% cost of equity, the theoretical justified PBV is roughly 0.45 times — far below the current 1.4 times. The market is pricing in the ROE recovery, not the current level. If ROE reaches 15%, the justified PBV at 14% WACC is roughly 1.1 times; at 20% ROE, it is 1.4-1.5 times. The current 1.4 times therefore implies the market expects ROE in the high teens by the end of the re-rating period.

🚨 What the surface reading misses. The surface reading is: PAT Rs -401 Cr in Mar 2025 — catastrophic loss, business may be broken. The research reads it further: Revenue was Rs 555 Cr — not materially below the normal range of Rs 550-680 Cr. The loss was entirely a credit-cost problem: excess provisions of roughly Rs 550-600 Cr above the normalized 2.5% credit-cost baseline consumed all income and created the reported loss. Revenue-generating capacity was intact throughout.

Lever 1 · Operating leverage — BUILDING. AUM per branch rose from Rs 7 Cr to Rs 8.65 Cr after 91 branch closures; operating cost ratio already fell to 6.3% and targets 5% by FY30. What proves it keeps working: Operating Leverage from Branch Productivity. It stops working if AUM growth stalls below 10% for two consecutive quarters, making branch-level fixed costs absorb a growing share of revenue and reversing the productivity gains.

Sources: our stock research file (22 August 2026) · quarterly results through Jun 26 · the company’s own earnings calls. The story check is re-scored every results season; the record below never changes.

Revenue For a bank, revenue is everything the franchise earns — interest on the loan book plus fee and other income.

Muthoot Microfin Ltd reported ₹669 Cr of income in the Jun 26 quarter, +19.7% year on year. That is the 2nd straight quarter of year-on-year growth. Over 7 years it has compounded at 17.9% a year. The last full year, FY26, came in at ₹2,375 Cr. The last four reported quarters add to ₹2,480 Cr.

Why this happened. After the sector stress forced management to cut FY27 guidance to 12-15% in May 2026, Q1 FY27 momentum — AUM up 18% year-on-year with Rs 1,000 Cr monthly disbursements expected from Q2 — prompted a re-raise to 20%. The concrete driver is twofold: the liquidity build (nearly Rs 5,000 Cr of sanctions available) and the customer acquisition engine returning to full capacity after the pause during FY25 stress. At 20% AUM growth, the loan book would reach roughly Rs 16,800 Cr by FY27 end, with each additional Rs 1,000 Cr of AUM generating roughly Rs 230-240 Cr of incremental revenue at a 23% blended yield.

FY26 revenue came in at ₹2,375 Cr (−7.3% on the year), capping 7 years at 17.9% compound. The latest quarter (Jun 26) printed ₹669 Cr, +19.7% year on year — the 2nd consecutive quarter of year-over-year growth.

Pace check: the last four quarters averaged +2.3% growth against the decade's 17.9% — the current year is running slower than its own long-run rate.

Acceleration check: trailing-twelve-month revenue grew +0.9% over the last 4 quarters against +0.7%/yr over the last 8 — stabilising.

FY26-Q4. revenue ₹632 Cr and profit ₹71 Cr as reported.

FY27-Q1. revenue ₹669 Cr and profit ₹81 Cr as reported.

Why-sources: our stock research file (22 August 2026) and the company’s own results for those quarters.

Net margin Net margin — what the bank keeps of every ₹100 of revenue after every cost, provision and tax. It is the cleanest single margin we can read for a lender.

Muthoot Microfin Ltd's net margin is 12.1% in the Jun 26 quarter, +11.0 percentage points against the same quarter a year ago. Across 8 fiscal years the net margin has ranged −8.7% to 26.9%. The current quarter sits inside that band.

Why this happened. The full-year FY25 credit cost of 9.4% absorbed roughly Rs 750 Cr in provisions, turning a profitable business into a loss-maker. The recovery has been sequential and consistent across five quarters: from the peak loss quarter (Mar 2025, PAT Rs -401 Cr) through Q1 FY27 (PAT Rs 81 Cr). The mechanism is dual: the stressed legacy book is being worked down (GNPA improved from 4.85% to 3.89% over FY26) and the new book originated after April 2025 has a PAR-0 rate of just 1.2% — indicating the underwriting tightening worked. Long-term management guides credit cost toward 2.5% as a sustainable level through diversification. At the current AUM scale of roughly Rs 16,500-17,000 Cr, each 1…

The latest quarter's net margin is 12.1%, +11.0 pp against the same quarter a year ago. Across 8 fiscal years the net margin has ranged −8.7%–26.9%.

Why: the numbers show the net margin move clearly, but the cost lines behind it sit below what we hold — so we state the move without inventing its driver.

FY26-Q4. revenue ₹632 Cr and profit ₹71 Cr as reported.

FY27-Q1. revenue ₹669 Cr and profit ₹81 Cr as reported.

Why-sources: our stock research file (22 August 2026) and the company’s own results for those quarters.

Net profit Net profit is what survives every cost, interest and tax — the number EPS, dividends and book value all grow from.

Muthoot Microfin Ltd earned ₹81.0 Cr of net profit in the Jun 26 quarter, +1,250.0% year on year. Full-year FY26 profit was ₹170 Cr. The 7-year compound rate is −2.4%. That is 12.1% of the quarter's revenue. The same quarter a year earlier earned ₹6.0 Cr. 1 of the last 12 reported quarters were loss-making.

Jun 26 profit was ₹81.0 Cr, +1,250.0% year on year. On the full year, FY26 printed ₹170 Cr (null), and the 7-year compound rate is −2.4%.

Why profit moved: revenue contributed +19.7% and the margin +11.0 pp — the quarter was margin-led: most of the profit growth came from keeping more of each sale.

Pace comparison, last four quarters: profit +883.3% vs revenue +2.3%. Profit is growing faster than sales — fixed costs are being spread over a bigger base, and each extra rupee of revenue drops more to the bottom line.

FY26-Q4. revenue ₹632 Cr and profit ₹71 Cr as reported.

FY27-Q1. revenue ₹669 Cr and profit ₹81 Cr as reported.

Why-sources: our stock research file (22 August 2026) and the company’s own results for those quarters.

Asset quality — the ladder Gross NPA is the slice of the loan book where repayments have stopped. Net NPA is what remains after the money already set aside against those loans. Falling is healing; rising is damage arriving.

Muthoot Microfin Ltd's gross NPA is 3.89% of the loan book in Mar 26, down from 4.84% a year ago. Net of provisions already set aside, 1.14% remains. That is the 3rd straight quarter of improvement. Across the 6 quarters held here the book has ranged 3.03% to 4.85%.

Mar 26: gross NPA at 3.89% and net NPA at 1.14%, against 4.84% / 1.34% a year ago. Over the 6 quarters we hold, the book's worst reading was 4.85% and its best is 3.03%. The ladder has now improved for 3 consecutive quarters.

The synthesis: profit growth at a bank is only as good as the book behind it, and this book is healing on a multi-quarter streak. A note on depth: quarterly provisioning detail is not in our numbers yet, so this ladder reads levels and trend, not the cost of the cleanup.

Why the ladder moved: recoveries, write-offs and slippages each play a part, and that split sits below what we hold — the numbers show the healing; the driver mix does not travel with them.

The loan book We read the loan book through revenue — when the book grows, revenue grows with it. It is a rough proxy, and we say so: rate moves and fee swings can shift it a few points in any one year.

Muthoot Microfin Ltd's revenue grew −7.3% in FY26 to ₹2,375 Cr, so the book is flat. The latest quarter ran +19.7% year on year. The net margin on that income is 12.1%, +11.0 percentage points against a year ago. Interest income is a proxy for the book; rate moves can shift it a few points in any one year.

Why this happened. The diversification thesis rests on converting existing JLG customers into individual loan, gold-loan, and LAP borrowers as they demonstrate repayment history. The individual loan portfolio — sourced exclusively from existing customers with 700-plus credit bureau scores — is at roughly Rs 3,200 Cr with near-zero 30-day delinquency. The gold-loan referral engine is scaling: over Rs 100 Cr monthly in referrals to the parent, generating 1.5% referral income without any balance-sheet risk. Diversification reduces the pure JLG cyclicality exposure that caused the FY25 crisis — a stress event that particularly hit borrowers juggling multiple JLG loans across several MFIs.

FY26 revenue was ₹2,375 Cr, −7.3% on the year, and the latest quarter ran +19.7% year on year. The net margin on that revenue is 12.1% this quarter (+11.0 pp YoY) — growth with a widening margin on it.

The synthesis: a lender compounds when the book grows while the margin holds and the loan book stays clean — gross NPA is the loan-quality read we carry here.

Returns on equity and assets Two numbers rate a bank: ROE — what it earns on shareholder money — and ROA — what it earns on everything it deploys. ROE above ~13–15% earns its keep; below that, growth builds book slowly.

Muthoot Microfin Ltd earns a return on equity of 6% in FY26. Its trough over the ladder below was −8% in FY25. For a lender the balance sheet is the operating asset, so equity return and asset return have to be read together.

FY26 ROE came in at 6%, recovered from a FY25 trough of −8%. Return on assets is withheld on this page — its two source series disagree for this quarter. That return is below the bar a bank must clear to compound book value quickly — which is also the honest reason the stock trades where it does.

Why ROE moved: profit compounded −2.4% a year over 7 years while the equity base grew more slowly — earnings recovering faster than book value builds is what lifts ROE off a trough.

Debt

For a bank, borrowings are raw material, not a warning sign — solvency is read through the returns and the loan book. A manufacturer’s debt is a claim against its profits, so the debt-to-equity lens that works everywhere else misleads on a lender and is not applied here.

A manufacturer’s debt is a claim against its profits; a bank’s borrowings are its inventory — money taken in to be lent out. The debt lens that works everywhere else misleads here, so this page does not apply it. The solvency questions for a bank — is the loan book sound, is the equity earning — are read through the loan-book and returns sections above.

Ownership Who owns the stock, quarter by quarter: promoters (the controlling owners), foreign and domestic institutions, and the public. Steady accumulation by people close to the numbers is a signal; a quiet register is also an answer.

Foreign institutions cut 3.4 points of Muthoot Microfin Ltd over 8 quarters, the biggest move on the register. That takes foreign institutions to 23.1% of the company. Domestic institutions moved +1.1 points over the same window, to 3.4%. The register is read on the four disclosed classes only; nothing is inferred between filings.

The register over the last two years — Foreign institutions: −3.4 points over 8 quarters to 23.1%; Domestic institutions: +1.1 points over 8 quarters to 3.4%; Promoters: +0.0 points over 8 quarters to 55.5%.

🚨 Why the register moved: foreign institutions drove it (−3.4 points), absorbed on the other side by domestic institutions (+1.1 points) — distribution into the market’s bid.

Safety line The Z-score estimates how far a company sits from balance-sheet distress — above roughly 3 is safe, below roughly 1.8 is the danger zone. It was built for manufacturers, so it is not applied to banks and lenders.

Muthoot Microfin Ltd: the Z-score is omitted — it was built for manufacturers, not banks, and applying it here would be theatre. The Z-score was built for manufacturers and is not applied to banks and lenders, so solvency here is read from the capital and asset-quality lines instead.

The safety line in one sentence: the Z-score is omitted — it was built for manufacturers, not banks, and applying it here would be theatre.

Valuation For a bank we price the book, not the earnings: P/BV is what the market pays for each ₹1 of the bank's net worth. A bank below 1× book is priced below the value of what it owns, net of what it owes.

Muthoot Microfin Ltd trades at 1.2× P/BV, mid-range by its own standards (57th percentile). Its long-run median P/BV is 1.1×, measured across 2.3 years of weekly readings. This places the multiple against the stock’s own record, and says nothing about what the business is worth.

Today's P/BV of 1.2× is mid-range by its own standards (57th percentile), against a long-run median of 1.1× measured over 2.3 years of weekly readings. This is a comparison against the stock's own history — not a claim about what it is worth.

The honest context for that discount: a bank earning about 6% on its equity is worth less per rupee of book, and the market has priced that in rather than overlooked it. The discount closes only if the returns themselves improve.

Put together: the multiple is unremarkable against its own past, so the story rests on the book-value line underneath it, not the multiple.

Stage: Turning around Every business sits somewhere on a fundamental arc, and this page names the spot before anything else. The last twelve quarters of revenue, profit and EPS growth — plus the return the business earns on its capital — are read as curves: Deteriorating (the curves are falling), Turning around (a trough has just formed and the last few quarters lift off it), Improving (the climb off the trough is sustained), Consistent (steadily positive with healthy returns), Topping out (still high but decelerating from the peak). When the curves genuinely disagree the read is Mixed; too little history is No read. CAGR (compound annual growth rate) is the smooth yearly pace that turns the starting value into the latest one — the fairest way to compare growth across different time spans. Read the columns together: if the 1-year number towers over the 10-year, recent growth is running hotter than the long-run trend. A dash means that window is not held, or the base year was a loss (where a growth rate is not meaningful).

Muthoot Microfin Ltd reads as turning around on its fundamental arc. Turning around — profit growth swung from −96.8% at the trough to +1250.0%, a 4-quarter improving streak (single-quarter readings), ROE lifting at 6.0%. The read is built from 11 quarters across 3 curves, on partial evidence.

Why it matters: growth inflections are where re-ratings start — the curves say a turn is forming, so the question becomes whether the next quarters confirm it.

One or more growth curves carry a base-effect spike — a large year-on-year move off a near-zero or loss-making comparable quarter. Those spikes are capped before the classifier reads the trajectory, and shown pinned on the chart, so a single distorted quarter does not drive the stage call.

A partial read: at least one curve is short, or the returns curve is not the computed quarterly series — hold the stage word a little more loosely.

4-Factor Sector Score

51.6/100 — rank 5 of 7 in Finance & Investments - Microfinance · 93% evidence confidence

Muthoot Microfin Ltd scores 51.6 out of 100 against the 7 companies it is compared with in Finance & Investments - Microfinance, ranking 5. Balanced evidence: keep at normal research priority and require another comparable period before raising conviction.

The four contributions add to the total exactly: 26.1 + 12.1 + 6.2 + 7.2 = 51.6. This is the SAME number shown on the sector comparison — it is computed once, for the whole peer set, and read here.

What would change it: The read weakens if ROA rolls over or gross NPA rises while sector-relative strength deteriorates.

Said versus delivered

What Muthoot Microfin Ltd's management promised, set against what actually arrived — 4 tracked promises on the record. Read straight from the company’s own earnings calls. A promise that slipped stays on this page after it is met.

FY27 AUM Growth Guidance Raised · 7 August 2026. In May 2026, management described FY27 AUM growth guidance as 12%-15%, whereas in Aug 2026 it revised the target to 20%, a material change to the growth outlook. Management cited Q1 momentum, liquidity, demand, and the festive season, but did not provide a quantitative bridge explaining why the earlier 12%-15% range was no longer appropriate, which warrants reconciliation in valuation models.

FY27 AUM Growth Target Reduction · 7 May 2026. In the Feb 2026 call, management explicitly guided for 20% AUM growth in FY27, naming a specific target of INR17,000 crores. At the May 2026 Capital Markets Day, an analyst framed FY27 guidance as 12-15% and management did not correct this, instead only asserting they aim for more than 15%, silently walking back the prior 20% commitment without offering any explanation for the reduction.

Long-term JLG vs. Non-JLG Portfolio Mix Target Shifted Significantly · 7 May 2026. In the Feb 2026 call, management stated the long-run portfolio split target as 65% JLG to 35% non-JLG. The May 2026 Vision 30:30 resets the 2030 endpoint to 53% JLG and 47% non-JLG, a materially more aggressive diversification that covers the same approximate timeframe without management acknowledging or explaining the departure from the prior stated target.

Long-term ROA Target Revised Materially Upward Without Reconciliation · 7 May 2026. In the Feb 2026 call, management stated a long-run sustainable ROA of 3.5% over a 3-5 year horizon, placing the target squarely in the same approximate timeframe as Vision 30:30. The May 2026 call now targets 5% ROA by 2030, a 150 basis point upward revision that management introduces without referencing or reconciling the prior 3.5% commitment, raising questions about the credibility of stated return targets.

Every quote above is taken word for word from the company’s own earnings calls.

Frequently asked questions