MUTHOOTMF Q3 FY26 earnings call.
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Revenue
₹605 Cr
verification pending
Revenue YoY
—
reported change
EBITDA
Pending
latest reported figure
Source
bse pending
record provenance
Actual signal trajectory
Where this quarter sits.
Quarter read
What the record says.
Muthoot Microfin delivered a strong Q3 FY26 with ₹605 crore revenue and ₹62 crore PAT, driven by robust disbursement recovery to ₹850 crore per month (targeting ₹1,000 crore/month in Q4). AUM reached ₹13,078 crore (+5.4% YoY), with PAR 1-90 improving 120bps to 5.9% and collection efficiency at 94.8% (+150bps QoQ). Operating cost ratio fell from 7% to 6.5% via branch rationalization (66 of 82 branches merged) and digital collection expansion (individual loan portfolio at ₹1,097 crore with near-zero delinquency and 9% bounce rate). Credit cost of 3.3% for Q3 is well below 4-6% guidance range, supporting ROA of 1.9%. The company targets ₹14,000 crore AUM by FY26 year-end (14% growth vs 5-10% guidance) and ₹17,000 crore in FY27 (20% growth), with JLG/non-JLG mix improving to 70:30. Key risks include 95% unsecured portfolio exposure and regulatory headwinds in certain states, though management expects 3% ROA in FY27 with credit cost normalizing to 2-2.5% range.
Colored figures show movement against the previous available record.
Guidance to track
- Management guided 14% AUM growth for FY26 vs original guidance of 5-10%, targeting ₹14,000 crore AUM. Disbursements have recovered strongly to ₹850 crore/month with Q4 trajectory at ₹1,000 crore/month.
- Company targets 20% AUM growth for FY27, reaching ₹17,000 crore from expected FY26 base of ₹14,000 crore. Portfolio mix expected to shift to 70:30 JLG/non-JLG by FY27 end from current 88:12.
- FY27 ROA expected to cross 3%, with sustainable 3-3.5% ROA and 14-18% ROE over 3-5 years. Operating cost-to-income ratio targeting 43% (from current 54.8%) within 9-12 months.
- Net interest margin expected to reach 12.7% as new disbursements at 24.85% yield (JLG) and 23% (individual loans) reprice the book. Overall blended yield target 23-23.5%. Cost of funds guidance at 9.7% in 12-18 months.
Risks flagged
- 95% of portfolio remains unsecured despite diversification efforts. Individual MSGB loans, while showing zero delinquency currently, represent early-stage portfolio that may face stress in economic downturns. Rejection rate of 30% even for 700+ credit score customers indicates risk selectivity challenges.
- Karnataka legislation in November last year caused significant provisioning impact. Tamil Nadu and Kerala (key states contributing 44% of new book) face political sensitivity. Management admits industry-wide 'event risk' remains a concern despite portfolio diversification strategy.
- Analyst directly questioned whether company can leverage existing capital for growth without dilution until FY27-28. Management admitted capital raise will be needed but not in near term, with current leverage at 3.3x (regulatory max 6x). Timing and pricing of potential equity raise remains uncertain.
- Management highlighted industry-wide focus on retaining existing customers (72% US+1) over acquiring new customers due to guardrails. As multiple MFI players compete for same quality borrowers, yields may face pressure despite stated guidance. Focus on US+1 limits total addressable market expansion.
Key quotes
- I can firmly say that we are back on the path. It's definitely a turnaround from the last financial year. Last year we had taken a management overlay of ₹230 crores. So we have absorbed everything. We don't require... credit cost is coming down and it'll continue to be on that trend and income is improving.
- The 30% rejection ratio in individual loans even though having a 700 score—that is the strategy that we have adopted for the industry. We are using AI and credit bureau scorecard for underwriting while technology handles collections. This will rationalize the cost of operation.
- For a short term... people would need to protect that database and those loyal and good repaying customer and continue to cater to them. Once there is a little bit of consolidation in the industry then you might see again people going back to acquiring more new customers and forming new JLGs.
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