Date: 9th June 2026
Rating Action Details
CRISIL Ratings has upgraded Muthoot Microfin Limited's long-term credit rating to CRISIL AA-/Stable from CRISIL A+/Positive. The Company's Commercial Paper rating has been reaffirmed at CRISIL A1+. The total bank loan facilities rated amount to Rs. 10,000 Crore, while the Commercial Paper program is for Rs. 300 Crore.
Financial Performance Drivers
Asset Quality Improvement
Gross Non-Performing Assets (GNPAs) declined to 3.89% from 4.84%, supported by collection efficiency held above 96%. The provision cover stands at 71.5%.
AUM Growth
Assets Under Management (AUM) grew approximately 13% year-on-year to Rs. 14,006 crore in FY26, representing a strong rebound from just 1.3% growth in FY25.
Profitability Recovery
Profit After Tax (PAT) recovered to approximately Rs. 170 crore in FY26 from a loss of Rs. 222 crore in FY25. Credit costs halved to 3.5%.
Cost of Funds Reduction
The cost of funds declined from 11.0% in FY25 to 10.3% in Q4 FY26, while the incremental cost of funds has come down to 9.9%.
Capitalization Position
Net worth stood at Rs. 2,854 crore with gearing at a comfortable 3.3x times as of March 31, 2026. The Capital to Risk-Weighted Assets Ratio (CRAR) remains healthy at 23.9%.
Strategic Implications
The rating upgrade is expected to enhance the Company's access to diversified funding sources at competitive rates, supporting continued reduction in borrowing costs. This will help optimize liability mix and strengthen net interest margins (NIMs) over the medium term.
The rating action reflects the Company's strengthening credit profile, adequate capitalization, diversified resource profile, robust liquidity position, and continued financial, operational, and management support from its parent, Muthoot Fincorp Limited.
Management Commentary
Mr. Thomas Muthoot, Chairman and Non-Executive Director, stated that the upgrade reflects trust and confidence from stakeholders and recognizes the Company's resilient business model, prudent governance, increasing diversification, and disciplined execution.
Mr. Sadaf Sayeed, CEO, emphasized that the higher rating strengthens their funding profile by enabling access to a wider pool of lenders and more competitive terms. He noted this is an important step toward Vision 2030 goals of achieving Rs. 30,000 crore in AUM, ROA of 5%+, and positively impacting 10 million households.
Company Overview
Muthoot Microfin Ltd. is part of Muthoot Pappachan Group and is one of the leading listed MFIs in India. As of 31st March 2026, the Company has 3.27 million active customers served through 1,670 branches spread across 21 states and 390 districts with a Gross Loan Portfolio (GLP) of Rs. 14,005.6 crore. The company is also part of S&P BSE Financial Services Index.