CRISIL upgrades Muthoot Capital to AA- despite profit crash
The rating lift reflects group backing, not operating strength. Net profit fell 76% to ₹11 cr in FY26.
— 1 earlier story on Muthoot Capital Services Ltd. →What's new
- CRISIL upgraded the long-term rating by one notch to 'AA-/Stable' from 'A+/Positive'.
- The upgrade follows a similar revision for parent group flagship Muthoot Fincorp.
- Annual net profit plunged 76% to ₹11 cr in FY26; gross NPAs at 7%.
Why this matters
The upgrade is a credit-market vote in the Muthoot Pappachan group, not in the subsidiary's standalone operations. For a ₹320 crore nano-cap NBFC, better funding terms are a lifeline when profitability is under this much strain.
What we're watching
- Whether cheaper funding translates into actual AUM growth towards the ₹10,000 cr target.
- The trajectory of gross NPAs, which remain at 7%.
- The sustainability of profitability given the high credit-cost environment.
The full read
Muthoot Capital's long-term credit rating is now AA-/Stable, up one notch from A+/Positive. CRISIL's move is a nod to the strength of the Muthoot Pappachan group. The upgrade mirrors a similar action on group flagship Muthoot Fincorp.
The better rating should trim the two-wheeler financing NBFC's cost of funds. That matters. Muthoot Capital's net profit fell 76% to just ₹11 crore in FY26, hit by high credit costs. Its gross non-performing loan ratio sits at 7%. Capital adequacy is 22%.
The rating is a credit-market verdict on the group's balance sheet, not a comment on the subsidiary's standalone health.
Questions answered
- Why did CRISIL upgrade the rating?
- The upgrade reflects stronger creditworthiness backed by support from the Muthoot Pappachan group. CRISIL cited adequate capitalisation (CAR 22%) and operational linkages with the group flagship, Muthoot Fincorp.
- How does this affect the company's finances?
- The better rating could lower borrowing costs and improve capital-market access. That is a critical input as the company targets assets under management of ₹10,000 crore by fiscal 2029.
- What is the state of the company's core operations?
- Profitability is weak. Net profit fell 76% to ₹11 crore in FY26 as higher credit costs weighed on results. Gross non-performing loans remain at 7%, indicating persistent asset-quality stress.
- Is the standalone credit profile strong enough for the new rating?
- The upgrade is largely driven by group support, not standalone strength. The ₹320 crore nano-cap NBFC still has modest asset quality, and the rating action is a bet on the parent's backing.
Story so far
All notes on MUTHOOTCAP →- 9 Jun 2026 · 12:36 PM IST CRISIL upgrades Muthoot Capital to AA- despite profit crash
- 1d ago Muthoot Capital sells ₹85 cr in vehicle loans to steady the ship after profit crash