Muthoot Microfin Limited — Investor Meet, 11-02-2025: Analysts/Institutional Investor Meet/Con. Call Updates

**Financial Performance:** Muthoot Microfin reported Assets Under Management (AUM) of ₹12,404 Cr, reflecting 8.3% growth year-over-year but a 1% drop sequentially. Loan disbursements fell 21.5% year-on-year and 23.9% quarter-on-quarter to ₹2,035 Cr, as the company took a cautious approach amidst challenging macro conditions, including natural disasters. The Gross Non-Performing Asset (GNPA) ratio increased to 3.03%, up 74 bps year-on-year, while the net interest margin (NIM) grew 23.1% to ₹420 Cr. The profit after tax (PAT) for the quarter was ₹3.8 Cr, down from previous periods due to increased provisioning. For the nine-month period, income surged 24.7% year-on-year.

**Future Outlook and Growth Drivers:** Management anticipates flat AUM growth of 5-7% this year but expects a return to normalcy in Q1 FY26, contingent on overcoming existing challenges. Key strategies include calibrated disbursements while focusing on collection efficiency and maintaining client relationships.

**Order Book and Operational Updates:** The company has focused on its existing clients, reducing new customer acquisitions amid a decline in overall disbursements across key regions, especially in Northern states due to heightened competition.

**Analyst Q&A Insights:** Analysts questioned credit cost guidance, now revised to 7.5%-8.5% for FY25, reflecting potential macro headwinds. Management is proactively taking provisions, with the goal of mitigating future risks. They maintained that current credit costs are being managed carefully, with expectations of stabilization in the coming quarters.

**Market or Regulatory Updates:** The management discussed potential impacts from regulations in Karnataka, with optimism that changes will eventually benefit regulated players by curbing unregulated lending practices, thus improving overall market health.

**Strategic Focus Areas:** Muthoot maintains a focus on asset quality and customer retention while improving operational efficiency through digital strategies, such as a customer app that enhances engagement and service delivery.

**Investor Insight:** Considering the company’s measured approach and robust financial performance, albeit under operational strain, it reflects a relatively stable outlook amid cautious guidance. Analysts may view Muthoot Microfin favorably, aligning with a potential ‘buy’ stance, as fundamentals remain strong despite current challenges.