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Muthoot, Manappuram hit new highs in weak market; rally upto 17% in 1 week
Shares of gold finance companies Muthoot Finance (₹2,598.80) and Manappuram Finance (₹275) hit their respective new highs, gaining 2 per cent on the BSE in Thursday's intra-day trade in an otherwise weak market. In comparison, the BSE Sensex was down 0.43 per cent at 82,158 at 11:40 AM.
In past one week, the stock price of Manappuram Finance (up 17 per cent) and Muthoot Finance (13 per cent) have outperformed the market after the Reserve Bank of India (RBI) on Friday, June 6, 2025 issued its final rules on loans against gold collateral, detailing easier norms for small ticket loans. The BSE Sensex was up 1 per cent during the same period.
In financial year 2024-25 (FY25), Muthoot Finance, India's largest gold loan Non-Banking Financial Company (NBFC), reported a consolidated loan asset under management (AUM) of ₹1.22 trillion, having crossed ₹1 trillion in gold loan AUM. Track LIVE Stock Market Updates
RBI revised guidelines for gold, silver-backed loans
The RBI announced the final gold lending guidelines to harmonise gold lending, including credit assessment for non-consumption loans, loan-to-value (LTV) thresholds based on ticket sizes, loan tenors, renewal/top-ups, internal audits, gold auctions, and other operational processes.
The RBI's revised guidelines for gold and silver-backed loans, effective April 1, 2026, are aimed at improving credit access for small borrowers and harmonising regulations across banks and NBFCs.
The LTV ratio for loans up to ₹2.5 lakh has been raised to 85 per cent (from 75 per cent), while loans between ₹2.5–5 lakh are capped at 80 per cent. Bullet loans must calculate LTV on the total maturity payout. Lending against bullion, exchange-traded funds (ETFs), or re-pledging is barred. These guidelines will apply uniformly to all the regulated entities doing gold lending, including banks, small finance banks (SFBs), and NBFCs.
Brokerage, Management views on Muthoot, Manappuram Finance
Structurally positive for small-ticket credit lenders; the higher LTV limits and relaxed norms are expected to drive growth in gold loan demand, benefiting players like Muthoot Finance and Manappuram Finance, according to ICICI Securities.
Now that the RBI has released the final guidelines on gold loans, the overhang on the gold loan NBFCs will now go away. This is positive for gold loan NBFCs, particularly Muthoot, which had borne the maximum brunt of the draft gold lending guidelines.
Meanwhile, looking ahead to FY'26, the management of Manappuram Finance remains optimistic. They expect the company's gold AUM to grow strongly, supporting digital onboarding and rural demand. The gold loan portfolio remains the company's core strength, accounting for 59.5 per cent of consolidated AUM compared to 55.4 per cent in Q3FY25. As of March 31, 2025, the company's consolidated gold loan AUM stood at ₹ 25,586 crore, up by 4.4 per cent quarter-on-quarter (Q-o-Q) and 18.7 per cent year-on-year (Y-o-Y) in spite of heightened competition, the management said.
Meanwhile, across the six rate cut cycles since calendar year 2002, NBFC had consistently outperformed during and/or after easing phases, delivering 79 per cent average 12-month market capitalisation gains, 24 per cent profit after tax growth, and 15 per cent book value (BV) expansion. Even during the cut phase, they had returned to 37 per cent on average, outpacing banks. Their outperformance stemmed from high sensitivity to liquidity and funding cost, according to analysts at Elara Capital. The brokerage firm in the strategy report said its preferred picks post rate cuts are HDFC Bank, Axis Bank, State Bank of India, Bank of Baroda, Bajaj Finance, Muthoot Finance, Mahindra & Mahindra, TVS Motors, Godrej Properties, Sobha, and Oberoi Realty.
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