Muthoot Capital cuts FY27 AUM guidance by ₹300 cr with no explanation
The NBFC's AUM target fell from ₹4,500 cr to ₹4,200 cr in two months, even as asset quality improved and funding costs dropped.
What's new
- FY27 AUM target revised down to ₹4,200 cr from ₹4,500 cr in two months.
- Co-lending business has been completely closed; retail portfolio grew ₹500 cr YoY.
- GNPA improved 182 bps YoY to 3.94%; retail GNPA at 3.49%.
- CRISIL rating upgraded to AA-stable, expected to cut borrowing costs by 40-50 bps.
Themes from the call
Demand
AUM grew only 4% QoQ to ₹3,300 cr, with incremental lending shifted from co-lending to own book.
Margins
Borrowing cost down 80 bps YoY; further 40-50 bps reduction expected from rating upgrade.
Capital allocation
Co-lending closed; retail portfolio now 85% of book; equity raise discussions with 2-3 investors ongoing.
Guidance watch
- FY27 AUM target: ₹4,200 cr (revised down from ₹4,500 cr).
- Pre-tax ROA target for FY27: 2.5% (current Q1 pre-tax ROA ~1%).
- Long-term AUM target of ₹10,000 cr by FY28-29 intact.
- Equity raise likely in Q2 if pricing aligns.
Risk flags
- AUM guidance cut without explanation raises credibility concerns after just two months.
- Risk-based pricing not yet implemented despite being claimed operational in October 2025.
- EV co-lending discontinued without prior warning, contradicting earlier commitment.
Key quotes
-
"This year, we'll have definitely crossed INR4,000 crores AUM, somewhere close to INR4,500 crores is what we are looking at."
— CEO, May 2026 call -
"Our AUM projection for this year is around 4,200 crores, and we will reach those numbers."
— CEO, July 2026 call
The brief
Muthoot Capital's July 2026 concall was supposed to be about a rating upgrade and falling bad loans. It was, but the real story is a guidance cut that came without a why. Two months ago the CEO told investors FY27 AUM would be 'close to ₹4,500 crores'. Now it's 'around 4,200 crores'. The ₹300 crore gap went unaddressed. That is three months of the company's own internal growth wiped from the forecast without a single explanation of where the shortfall came from.
The asset quality story remains strong. GNPA fell 182 bps year-on-year to 3.94%. A third ARC transaction cleaned up aged stress. The CRISIL upgrade to AA-stable should cut funding costs by 40-50 bps. Retail portfolio grew ₹500 crores YoY. But the guidance revision undercuts the narrative. If management doesn't know why AUM will fall short, investors don't know what to trust.
Two other inconsistencies harden the pattern. Risk-based pricing was described as already applied to the two-wheeler portfolio in October 2025. Now management says it is 'looking to implement' it. And EV co-lending, which was explicitly being continued six months ago, has been completely closed. Each flip-flop on its own is manageable. Together they point to a management that changes course without telling the street why.
The call also made clear that the pivot away from co-lending is now total — zero incremental co-lending in Q1. The company is betting entirely on its own retail book for growth. That may be the right call, but it makes the AUM revision sting more. If the own book is now the only growth engine, why is the full-year target shrinking?
The long-term target of ₹10,000 crore AUM by FY28-29 is unchanged. But the credibility of that target, and every number between now and then, depends on management learning to explain what changed.
Muthoot Capital's numbers are improving. Its guidance has a credibility problem.