Morgan Stanley had an earlier rating of “equalweight” on the stock. The brokerage has also raised its price target on Morgan Stanley to ₹2,920 from ₹2,880 earlier.
The revised price target implies a potential upside of 16% from Wednesday’s closing levels.
The brokerage has cited three key reasons behind the upgade:
- Group-leading RoE and growth in its Earnings Per Share (EPS).
- Potentially ongoing consensus upgrades contrary to cuts seen among peers
- Negligible asset quality risk, even as bad loans are likely to rise.
Jefferies has also raised its price target on Muthoot Finance to ₹2,950 from ₹2,660, which implies a potential upside of over 17% from Wednesday’s close.
Tailwinds to gold prices, headroom to lift LTV should support Muthoot’s healthy loan growth, according to Jefferies, who believes that the stock remains a defensive play amidst the rising broader stress
The brokerage is anticipating a net profit Compounded Annual Growth Rate (CAGR) of 23% and Return on Equity (RoE) of 21% over financial year 2026-2028.
On the flip side, Motilal Oswal remains “neutral” on Muthoot Finance with a price target of ₹2,790, which implies a potential upside of 11% from Wednesday’s close.
The brokerage said that with a favourable outlook for gold loans, driven by the limited availability of unsecured credit, the company is well positioned to maintain its healthy loan growth momentum. However, at 2.4 times financial year 2027 price-to-book-value, the positives are factored in.
Muthoot Finance’s results were better than expected on all fronts, with overall Assets Under Management (AUM) increasing by 42% from last year to ₹1.2 lakh crore, while the gold loan AUMs also remained strong at 40% to ₹1.13 lakh crore.
Asset quality also saw significant improvement from the previous quarter, with Gross Stage 3 assets from 3.41% from 2.58% earlier, while Net Stage 3 assets improved to 2.1% from 2.79% earlier.
The board has also approved additional equity infusion of up to ₹500 crore in Muthoot Money, which is 4% of its overall AUM, and another ₹200 crore in Muthoot Homefin, which is close to 2% of the overall AUM of the company.
Out of the 25 analysts that have coverage on Muthoot Finance, 15 of them have a “buy” rating on the stock, six say “hold”, while four have a “sell” rating on the stock.
Shares of Muthoot Finance had ended 0.7% lower on Wednesday ahead of the results announcement at ₹2,515.1. The stock is down 6% in the last one month.
