CRISIL Upgrades Muthoot Microfin Limited Long-Term Rating to AA-/Stable

CRISIL Upgrades Muthoot Microfin Limited Long-Term Rating to AA-/Stable​

Muthoot Microfin Limited, a leading Non-Banking Financial Company (NBFC-MFI), has seen its long-term credit rating upgraded by CRISIL Ratings. The company's Commercial Paper rating was simultaneously reaffirmed at A1+.

The upgrade recognizes the strengthening credit profile of Muthoot Microfin, which is underpinned by improved asset quality, a recovery in profitability, adequate capitalization, and a diversified resource base. This development is expected to enhance the company's access to diverse funding sources at competitive rates, aiding efforts to reduce borrowing costs and optimize its liability mix.

The rating action details are as follows:

Financial Stability and Operational Growth​

The rating upgrade reflects significant operational improvements at Muthoot Microfin Limited. The company's Assets Under Management (AUM) grew by approximately 13% year-on-year, reaching Rs. 14,006 crore in FY26, marking a strong rebound from just 1.3% growth in FY25 following portfolio stabilization.

Key indicators of improved asset quality and financial health include:

• Asset Quality: Gross Non-Performing Assets (GNPAs) declined to 3.89% from 4.84%. The collection efficiency remained above 96%, supported by a provision cover of 71.5%.
• Profitability: Profit After Tax (PAT) recovered to approximately Rs. 170 crore in FY26, reversing the loss of Rs. 222 crore recorded in FY25. Credit costs halved to 3.5%.
• Funding Costs: The company has demonstrated substantial progress in lowering its cost of funds, which declined from 11.0% in FY25 to 10.3% in Q4 FY26. The incremental cost of funds came down to 9.9%.

The balance sheet remains robust. As of March 31, 2026, the company maintained a net worth of Rs. 2,854 crore with a gearing ratio standing at a comfortable 3.3x. Muthoot Microfin also reported a healthy CRAR of 23.9%.

Market Reach and Company Snapshot​

As of March 31, 2026, the company served 3.27 million active customers through 1,670 branches across 21 states and 390 districts. The Gross Loan Portfolio (GLP) stood at 14,005.6 Cr.

Management Commentary​

Commenting on the rating upgrade, Mr. Thomas Muthoot, Chairman and Non-Executive Director of Muthoot Microfin, stated that the recognition reflects the trust and confidence placed in the company by its stakeholders. He noted that the upgrade stands out as a testament to their resilient business model, prudent governance, and disciplined execution within a challenging operating environment for the microfinance sector.

Mr. Sadaf Sayeed, CEO of Muthoot Microfin, described the upgrade from CRISIL A+ to AA-as a significant milestone that reinforces confidence among lenders, investors, and other stakeholders in the company's long-term growth strategy. He emphasized that this higher rating strengthens their funding profile by enabling access to a wider pool of lenders. Mr. Sayeed also outlined commitment toward Vision 2030 goals, which include achieving Rs. 30,000 crore in AUM and positively impacting 10 million households.

MUTHOOTMF Stock Price Movement​

Today, Muthoot Microfin Limited shares gained by 2.50%, with the stock settling near ₹184.8 in post-market trading. The equity saw robust buying interest, recording a volume of 180,420 shares and trading within its intraday range.