Muthoot Finance Share Price: Why Is the Stock Falling Today? Shares Sink Over 11% Despite 43% Q1 2026 Profit Growth

Shares of Muthoot Finance fell more than 11% on Monday, August 3, despite the gold loan financier reporting strong earnings for the June quarter, as investors focused on shrinking lending margins and increasing competition in the gold loan business.

The stock declined as much as 11% during intraday trade after the company announced its Q1 FY27 results. At the time of writing, the shares were trading around ₹3,120.

Why Is Muthoot Finance Share Price Falling Today?

Although Muthoot Finance reported healthy growth in profit and loan assets, the June-quarter results highlighted pressure on profitability as lending yields declined faster than expected.

The company's standalone net interest margin (NIM) fell 173 basis points year-on-year and 297 basis points sequentially to 10.4%. Yield on loans also moderated to 17.9%, reflecting lower lending rates, a changing product mix and increasing competition in the gold loan segment.

Kotak Neo Research noted that while loan growth remained healthy despite a 4% sequential decline in gold prices, the sharp fall in yields and softer medium-term growth expectations weighed on profitability. The research note revised its fair value on the stock to ₹3,400 from ₹3,925 while retaining its ADD rating.

The report also highlighted that standalone loan assets under management (AUM) grew 5.7% quarter-on-quarter despite the decline in gold prices, indicating that the company continued to add business even in a softer pricing environment.

Muthoot Finance Q1 2026-27 Results

Muthoot Finance reported a consolidated net profit of ₹2,825 crore for the June quarter, up 43% from ₹1,974 crore in the corresponding quarter last year.

Total income increased to ₹8,695 crore from ₹6,485 crore a year earlier, while consolidated loan assets under management rose 43% year-on-year to ₹1.92 lakh crore.

On a standalone basis, profit after tax rose 25% year-on-year to ₹2,550 crore from ₹2,046 crore. Standalone loan AUM grew 43% to ₹1.72 lakh crore, with gold loans accounting for nearly 95% of the loan book.

Kotak Neo Research also highlighted several positives from the quarter. Net interest income rose 26% year-on-year, supported by strong AUM growth. Credit costs remained low at 0.12%, provisions declined 79% sequentially to ₹51 crore, and the gross Stage-3 asset ratio improved to 2.3%, indicating stable asset quality.

Management Commentary

Speaking to CNBC-TV18, the management said lending yields are expected to stabilise in the 18-18.5% range and maintained its NIM guidance of 10.5-11%.

The company also indicated that its FY27 AUM growth guidance of around 15% could be revised upwards after the second quarter if business momentum remains strong.

Separately, the board approved the appointment of Alexander George as Managing Director with effect from October 1, 2026.

While Muthoot Finance delivered another quarter of strong profit growth and continued expansion in its loan book, Monday's sharp decline in the share price reflected investor concerns that lower lending yields, margin pressure and intensifying competition could weigh on earnings growth over the coming quarters.

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