Muthoot Finance Share Price In Focus After Moody’s Ratings Upgrade

Muthoot Finance share price is in focus on Thursday. This follows news of Moody’s Ratings, which has upgraded the company’s long-term corporate family rating to Ba1 from Ba2, with a stable outlook. This upgrade reflects Moody’s assessment of Muthoot’s strong financial health, supported by its leading position and long-standing experience in India’s gold financing sector.

Profitability Driving Muthoot Finance Share Price

A key strength highlighted is Muthoot’s profitability, which Moody’s considers the best among rated Indian finance companies. Strong net income, driven by high net interest margins and low credit costs in its gold financing business, has boosted the company’s capital levels. Its tangible common equity to total managed assets stood at a healthy 23.3% at the end of December 2024.

Concerns Over Non-Gold Subsidiaries

However, Moody’s also noted some concerns regarding Muthoot’s non-gold financing subsidiaries, which have grown rapidly and experienced a slight decline in asset quality. The company’s consolidated problem loans rose to 4.1% in December 2024, up from 3.0% in March 2024, and credit costs more than doubled due to increased delinquencies in microfinance loans.

Future Outlook and Potential Rating Changes

While Moody’s will monitor Muthoot’s ability to manage these problem loans, they expect the impact on the overall portfolio to be moderate, as gold financing remains the primary focus. Muthoot’s funding relies mainly on bank borrowings, but it has been diversifying to more stable and long-term sources. Despite modest liquidity, the short-term nature of its loans and access to funding markets mitigate risks.

Muthoot Finance Raises US$250 Million Through Bond Issuance

Muthoot Finance Limited has successfully raised $250 million by issuing US dollar-denominated senior secured notes. These bonds, which are due in 2029 and carry a coupon rate of 6.375%, were issued under Muthoot Finance’s $2 billion global medium-term note program. Deutsche Bank AG, Singapore Branch, and Standard Chartered Bank acted as the managers for this offering. The newly issued notes have been listed on NSE IFSC Ltd., located in GIFT City, India.

Conclusion

Moody’s upgrade of Muthoot Finance’s rating to Ba1 reflects confidence in its core gold financing business and profitability. While concerns exist regarding non-gold subsidiaries, the bond issuance further strengthens its financial position. Overall, Muthoot Finance appears well-positioned in the market.

At 1.37 PM, Muthoot Finance share price was up 0.60% and was trading at ₹2,356.75.

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