Muthoot Finance (MUTHOOTFIN) investors experienced a whirlwind on February 13, 2026. Despite reporting a staggering 95% jump in net profit, the stock plummeted over 11%, marking its worst single-day fall in years.
If the numbers were so good, why did the market react so poorly? Let’s dive into the data to uncover the “hidden” details in the Q3 FY26 earnings.
The Headline Numbers: A Golden Surface
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On paper, Muthoot Finance delivered a powerhouse performance for the quarter ending December 31, 2025:
| Metric | Q3 FY26 | Q3 FY25 | YoY Change (%) |
|---|---|---|---|
| Net Profit | ₹2,656.4 Cr | ₹1,363.0 Cr | +94.9% |
| Net Interest Income | ₹4,467.0 Cr | ₹2,723.0 Cr | +64.0% |
| Total AUM | ₹1,64,720 Cr | ₹1,11,300 Cr | +48.0% |
| Gross NPA (Stage 3) | 1.58% | 4.22% | Significant Improvement |
The “Deep Dive”: Why the Stock Tanked
If you only looked at the profit, you’d be confused. However, professional traders and analysts looked at the quality of those earnings. Here is why the stock faced a massive sell-off:
1. The “One-Off” Nature of Profits
A significant portion of this quarter’s massive profit didn’t come from new business. Instead, it was driven by interest income write-backs. When the company recovered old “bad loans,” they were able to book previously lost interest as profit. The market views this as a “one-time” gain rather than a sustainable trend.
2. Softening Margins (NIM Compression)
While the top line grew, the Net Interest Margin (NIM)—the bread and butter of NBFCs—showed signs of sequential pressure. As borrowing costs for the company remain elevated, the ability to pass those costs on to gold loan borrowers is becoming harder due to intense competition from banks.
3. Decline in Gold Tonnage
Gold loan companies thrive when the actual weight of gold pledged increases. This quarter, while the value of the loans stayed high (due to high gold prices), the actual tonnage of gold held by Muthoot saw a slight quarter-on-quarter dip. This suggests that the growth is being fueled more by gold price inflation than by new customer acquisition.
4. “Sell on News” Strategy
Muthoot Finance stock had been rallying for five consecutive sessions leading up to the results. Many institutional investors used the “positive” headline numbers as an opportunity to book profits, leading to a “sell on news” event that triggered stop-losses across the board.
Technical Snapshot: LTP and Key Levels
As of the closing bell on February 13, 2026:
- Last Traded Price (LTP): ₹1,815.40 (Approx.)
- Percentage Drop: -11.2%
- Support Level: The stock is currently testing its 200-day Moving Average (DMA). A break below ₹1,780 could signal further weakness.
- Resistance Level: Immediate resistance is now seen at ₹1,950.
What Should Investors Do?
Most major brokerages, including Jefferies and CLSA, remain “Bullish” with targets still hovering above the ₹2,100 mark. They argue that the correction is an overreaction to technical accounting and that the company remains the undisputed leader in the gold loan space.
Expert Note: “The sharp fall is a classic case of the market punishing ‘low-quality’ earnings despite a ‘high-quantity’ profit. Long-term investors should watch for stabilization around the ₹1,800 level.”
Disclaimer: This post is for informational purposes only and does not constitute financial advice. Please consult with a SEBI-registered advisor before making investment decisions.
