Muthoot Finance vs Manappuram: Which Gold NBFC Stock To Buy Post RBI New Gold Loan Norms?

Muthoot Finance vs Manappuram: The Reserve Bank of India's revision of gold loan norms has sparked investors' interest towards gold loan Non-Banking Financial Companies (NBFCs) like Muthoot Finance and Manappuram Finance. Both the gold loan NBFC stocks have rallied since the beginning of Monday trading session.

The Muthoot Finance share price has surged significantly today, touching its intraday high of Rs 2,527 per share. The company scrip was trading 2.26% higher at Rs 2502 per share on BSE at 10 am. Manappuram share price also touched a 52-week high mark of Rs 253.9 per share today. The company scrip was trading 1.82% higher at Rs 252.10 per share on BSE with a market capitalisation of Rs 21,338.62 crore.

Mannapuram vs Muthoot Finance: Which Gold NBFC Stock To Buy Post New Gold Loan Norms?

While RBI's revised gold loan norms are likely to benefit multiple NBFCs like Muthoot Finance, Manappuram, Bajaj Finance, Shriram Finance, etc, it is likely to benefit NBFCs with larger exposure to gold loans, reported CNBC TV 18, citing Morgan Stanley's recent report.

Among Manappuram and Muthoot Finance, the latter has more opportunity to rally with a strong earnings outlook for the current quarter and a positive financial year 2025-26 outlook. Morgan Stanley maintained an 'Equalweight' rating for Manappuram and Muthoot Finance shares, but indicated a better growth potential for Muthoot Finance.

Manappuram vs Muthoot Finance: Target Price Fixed By Analysts

Manappuram and Muthoot Finance have been rated 'Neutral' by Motilal Oswal on revised gold loan norms. The brokerage has initiated a 'Buy' rating for IIFL Finance. Motilal Oswal has fixed a target price of Rs 2,500 for Muthoot Finance shares, Rs 240 for Manappuram shares, and Rs 520 for IIFL Finance shares.

Commenting on gold loan NBFC outlook, brokerage Motilal Oswal noted, "This is positive for gold loan NBFCs, particularly MUTH, which had borne the maximum brunt of the draft gold lending guidelines. We have revised our TP for MUTH, MGFL, and IIFL Finance to align them with our ratings on the respective stocks. Our ratings and estimates are unchanged since we always believed that the gold lending guidelines would not have any significant impact on gold loan growth over the medium to long term."

RBI Revises Gold Loan Norms

RBI on Friday issued revised gold loan guidelines, which are a much diluted version of the draft gold loan guidelines. The final gold loan norms announced by the RBI are likely to benefit small-ticket borrowers. The RBI also increased loan to value ratio to 85% for gold loans of amount upto Rs 2.5 lakh.

The revised gold loan norms also include credit assessment for non-consumption loans, LTV threshold change, loan tenors, renewal/top-ups. Internal audits, gold auction, etc.

"These guidelines will apply uniformly to all the regulated entities doing gold lending, including banks, SFBs, and NBFCs. These gold lending guidelines have to be complied with as expeditiously as possible but no later than Apr'26. Loans sanctioned before the date of adoption of these directions shall continue to be governed by the extant guidelines," noted Motilal Oswal remphasising that the new gold loan rules will not disrupt gold loan lending activities.

"We reiterate that the implementation of final gold lending guidelines is expected to have only a marginal near-term impact on the disbursement LTV of gold loan NBFCs, with no material implications over the medium to long term. Final gold lending guidelines, released by the RBI after consultations with various industry stakeholders, including gold lending associations and lending institutions, are milder (relative to the draft), particularly in terms of the LTV thresholds, and credit assessment for gold loans will now be required only for gold loans above ticket sizes of INR250K per borrower," Motilal Oswal added.

Disclaimer: The write-up is just for information purposes, and is not a recommendation to buy, sell or hold. We have not done fundamental or technical analysis and have no opinion on article mentioned. Neither, the author nor Greynium Information Technologies should be held liable for any losses. Please consult a professional advisor.