Muthoot Microfin Limited has informed the Exchange regarding an update.
MUTHOOTMF · price
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On the reaction day the stock moved 0.5 pts less than Nifty Microcap 250 and 0.4 pts less than its Finance peers, over the same two closes: a difference in percentage points, not a measure of what the filing did.
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Muthoot Microfin swung to a net loss of ₹2,225 crore in FY25, compared to a profit of ₹4,496 crore in FY24, with Q4 alone posting a loss of ₹4,012 crore. Despite this, total income grew ~14% year-on-year to ₹25,644 crore, driven by higher interest income. The losses were largely due to a sharp jump in impairment on financial instruments to ₹10,423 crore (from ₹1,725 crore last year) and a ₹1,142 crore net loss on derecognition of financial assets. The company cited microfinance sector headwinds — borrower over-leveraging, extreme weather, and the Karnataka Micro Loan Ordinance 2025 — as key reasons. Asset quality deteriorated with Gross NPAs rising to 4.84% (from 2.29%) and Net NPAs to 1.34%. A management overlay of ₹2,297 crore was created, of which ₹1,325 crore was specifically for Karnataka impact. CRAR remains comfortable at 27.86% and operating cash flow was positive at ₹13,820 crore. The auditor (Suresh Surana & Associates LLP) issued an unmodified opinion, and a reference to a 'predecessor auditor' for FY24 indicates an auditor change.
The sharp swing to losses and worsening asset quality are likely to weigh heavily on the stock in the short term, though revenue growth and strong capital adequacy provide some cushion. Investors should watch for improvement in collection trends and resolution of the Karnataka disruption before taking a constructive view.