CRISIL Upgrades Muthoot Capital Services' Long-Term Debt Instruments, Reaffirms Commercial Paper Rating

CRISIL Upgrades Muthoot Capital Services' Long-Term Debt Instruments, Reaffirms Commercial Paper Rating​

CRISIL Ratings Limited has upgraded the ratings on various long-term bank facilities and debt instruments of Muthoot Capital Services Limited (MCSL). The agency upgraded these key facilities from 'Crisil A+/Positive' or 'Crisil PPMLD A+/Positive' to 'Crisil AA-/Stable' and 'Crisil PPMLD AA-/Stable', respectively. Meanwhile, CRISIL reaffirmed its short-term rating for MCSL’s Commercial Paper instruments at 'Crisil A1+'.

The ratings action was driven by the improved long-term rating of Muthoot Fincorp Ltd (MFL), the flagship company of the Muthoot Pappachan group (MPG). CRISIL Ratings also noted the continued operational and managerial support provided to MCSL from the MPG, given the linkages with the wider group.

Key Rating Actions for Debt Instruments​

The upgrades span several debt types for MCSL. The details of the rating changes are presented below:


Additionally, CRISIL Ratings withdrew its rating on specific non-convertible debentures (NCDs) and Principal Protected Market Linked Debentures (PPMLD) totaling ₹160 Crore and ₹35 Crores, respectively, after receiving independent confirmation of their full redemption.

Financial Health and Operational Indicators​

The rating agency noted that MCSL’s capital position remains adequate. Net worth stood at ₹670 crore and the Capital Adequacy Ratio (CAR) was 22.04% as on March 31, 2026. The company reported a growth in its overall assets under management (AUM) by 12.5%, reaching ₹3,441 crore as of March 31, 2026, compared to ₹3,058 crore on March 31, 2025.

In terms of portfolio composition, the proportion of two-wheelers stood at 86% as of March 2026, down from 98.3% in fiscal 2024. The company aims to increase its focus on non-two-wheeler segments going forward.

Regarding asset quality and operations, MCSL tightened underwriting standards and collection mechanisms, leading the Gross Non-Performing Assets (GNPA) ratio to improve to 7.0% as of March 31, 2026, although this is an increase from 4.9% in March 31, 2025. The average monthly collection efficiency remained above 96% during the trailing 12 months.

Analytical Assessment and Future Outlook​

CRISIL Ratings highlighted several strengths that contributed to the rating action, including strong support and operational linkages from MPG, adequate capitalization, and the extensive experience of the promoters and management in vehicle financing.

However, the ratings also identified areas requiring monitoring. The company’s asset quality is deemed modest at 7%. Furthermore, MCSL's profitability moderated in fiscal year 2026 due to increased credit costs (2.0% in FY2026 versus 0.7% in the previous fiscal), which compressed the net interest margin. Geographically, while concentration has been reduced from 50% as of March 31, 2026, MCSL’s operations remain substantially concentrated in southern states.

MCSL maintains a comfortable asset liability maturity profile, with cash and equivalents totaling ₹411.3 crore and unutilized CC/WCDL limits amounting to ₹32 Crore as on March 31, 2026.

The Key Financial Indicators for MCSL across the last four fiscal years are summarized in the table below:

MUTHOOTCAP Stock Price Movement​

As of 12:41 PM, shares of Muthoot Capital Services Limited are advancing strongly in live trading, climbing 0.77% and currently sitting at ₹197.39. The stock activity has been robust, with 7,938 shares traded during the current market session.