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Muthoot Upgraded to Ba1 by Moody’s
April 3, 2025
Muthoot Finance was upgraded by a notch to Ba1 from Ba2 by Moody’s. The upgrade reflects its strong credit profile supported by its leadership in India’s gold financing industry, strong operational controls, and solid risk management. Despite competition, it has maintained stable asset quality and consistent loan growth. According to Moody’s, its profitability is a key strength, with a high net interest margin and low credit costs, resulting in a strong net income to average managed assets ratio of 4.9% in December 2024. However, its non-gold financing subsidiaries have seen rapid growth and rising asset quality concerns, leading to an increase in problem loans from 3.0% to 4.1% and a rise in credit costs due to microfinance delinquencies. While this is a key monitorable, the impact on Muthoot’s overall portfolio is expected to be moderate. The company primarily relies on bank borrowings (56% of funding), however it has diversified into more stable, long-term funding sources and foreign currency borrowings.
Muthoot’s bonds traded stable with its 6.375% 2029s at 98.3, yielding 6.93%
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