Muthoot Microfin Reports Record Q2 FY27 Financial Performance with PAT Surging to ₹110.8 Crore

Muthoot Microfin Ltd has reported its strongest quarterly performance in Q2 FY27, with profit after tax (PAT) surging to ₹110.8 crore. This represents a 263 per cent jump year-on-year, marking the first time the Kerala-based microfinance lender has crossed the ₹100-crore quarterly profit mark.

During the quarter, the non-banking financial company-microfinance institution (NBFC-MFI) posted record quarterly disbursements of ₹2,900 crore, reflecting a 27.5 per cent increase. Its gross loan portfolio grew by 22 per cent to reach ₹15,323 crore as of September 30.

Total income for the quarter rose 26.9 per cent to ₹732.9 crore. Net interest margins (NIM) improved by 50 basis points quarter-on-quarter to 12.5 per cent, while the cost-to-income ratio fell sharply to 48.1 per cent from 53.7 per cent in Q1. Pre-provision operating profit climbed 67.4 per cent year-on-year to ₹249.4 crore.

Asset quality showed continued recovery during the period. Gross non-performing assets (NPA) declined to 3.38 per cent, marking an improvement of 123 basis points year-on-year. Credit costs held steady at 2.6 per cent, remaining within the company's guided range of 2.5 to 3 per cent.

The company also observed a notable shift in its portfolio composition. Non-joint liability group (JLG) loans expanded to 31 per cent of the gross loan portfolio, surpassing the company's year-end target of 30 per cent. Specifically, the Small and Micro Enterprise Loan portfolio reached ₹4,164 crore with near-zero delinquency, while gold loans via a co-lending tie-up with Muthoot Fincorp added ₹453 crore in disbursements during the quarter.

On the liability side, the average cost of borrowing fell to 9.93 per cent, entering single-digit territory for the first time. This reduction was supported by a CRISIL upgrade to AA-/Stable and CareEdge Global revising its outlook to Positive.

Digital adoption advanced as digital collections reached 47 per cent of total collections, up from 25 per cent a year earlier. Muthoot Microfin currently serves 32.7 lakh active customers across 1,675 branches spread over 21 states.

As of the end of the quarter, the company's capital adequacy stood at 25.5 per cent. Additionally, Muthoot Microfin held liquidity of ₹1,835 crore along with ₹4,442 crore in unavailed credit lines.

"Muthoot Microfin's Q2 FY27 results highlight the positive impact of diversified portfolio strategies, such as expanding non-JLG loans and SME financing, alongside improvements in operational efficiency. Crossing the ₹100-crore quarterly profit milestone while simultaneously reducing borrowing costs and improving asset quality demonstrates strong financial discipline. Maintaining healthy liquidity and capital adequacy will be crucial as the institution continues to scale its operations across states." — Dr. Shishir Gupta, Founder & CEO, StartupLanes