Muthoot Microfin Limited has submitted to the Exchange, the financial results for the period ended Jun 30, 2025.
MUTHOOTMF · price
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Muthoot Microfin reported weak Q1 FY26 results with total revenue falling about 15.8% year-on-year to ₹558.6 crore from ₹663.5 crore, mainly due to lower interest income. Net profit collapsed roughly 94.5% to just ₹6.2 crore (from ₹113.2 crore) as impairment provisions rose sharply to ₹125.4 crore versus ₹70.8 crore a year ago. Asset quality deteriorated, with Gross NPA climbing to 4.85% (from 2.10% YoY) and Net NPA at 1.58% (from 0.71%), though the company consumed its earlier ₹229.7 crore management overlay including the Karnataka-related portion. Gross loan portfolio was nearly flat at ₹12,252.8 crore (+0.3% YoY) across 1,726 branches, while the company entered Northeast India (Assam) and began secured lending in gold loans and micro LAP. The board also approved a ₹300 crore commercial paper issuance limit for FY26, and the company flagged instances of borrowing covenant breaches, though no lender has initiated remedial action.
Sharply weaker earnings and rising NPAs signal continued stress in the microfinance portfolio, which may weigh on the stock in the short term. However, management's pivot toward secured lending, geographic diversification, and a strong 27.85% CRAR offer some cushion, though profitability is likely to remain muted until asset quality stabilizes.