With gold prices breaking record highs, the rally has also lifted the fortunes of investors in gold loan NBFCs, including Muthoot Finance and Manappuram Finance. The record run in the yellow metal this year has increased the appeal of both stocks amid expectations that rising gold prices will boost demand for gold loans, keeping the shares elevated in recent months.
With gold prices crossing a record $4,000 per troy ounce in the international market lately, driven by persistent geopolitical tensions, global economic uncertainty, and growing expectations of further US interest rate cuts, the yellow metal has gained 52% so far this year.
Similarly, ₹285.20 per share”>Manappuram Finance has surged 52% in the same period, reaching ₹285.20 per share. Its peer, Muthoot Finance, has also risen 48% in 2025 so far, currently trading at ₹3,165.
Demand for gold loans has remained strong in recent quarters, with analysts expecting it to rise further. Limited access to unsecured loans, along with rising gold prices, is likely to keep demand steady.
Meanwhile, other factors, such as target price upgrades from brokerages and recent lending guidelines by the Reserve Bank of India, have also supported the stellar run.
While gold financing stocks have rallied, jewellery stocks have not followed suit; in fact, they have lost significant value, as the record rise in gold prices has raised concerns over weaker retail demand and may prompt consumers to look for lower-karat jewellery.
CLSA lifted target prices for gold financiers
Earlier this month, global brokerage CLSA raised targets for both gold financing stocks, revising Muthoot Finance share price target to ₹3,600 from ₹2,740 and Manappuram Finance share price target to ₹310 from ₹260, CNBC TV18 reported.
According to brokerage analysis, gold prices have climbed 20% sequentially, representing the strongest quarterly rise in several periods. The brokerage also pointed out that the Loan-to-Value (LTV) ratios for Muthoot and Manappuram were 62% and 57%, respectively, at the end of June, which is lower than their historical averages.
With the Reserve Bank of India permitting lenders to raise LTV on smaller gold loans, CLSA anticipates accelerated growth for both companies.
CLSA noted that the combination of higher gold prices, gradual increases in LTV, and consistent loan volumes has prompted it to significantly raise its projected AUM growth for Muthoot and Manappuram.
CLSA now projects Muthoot Finance to achieve a 23% compound annual growth rate (CAGR) in AUM and a 37% CAGR in profit after tax (PAT) for FY2025-2027, while revising its PAT forecasts upward by 10–15%.
For Manappuram Finance, however, the brokerage has lowered its PAT projections for FY2026 and FY2027 by 7% and 13%, respectively, citing reduced net interest margins, while the estimates for FY2028 remain mostly unchanged.
ICRA projects organised gold loans to reach the ₹15-trillion mark
Rating agency ICRA, in its latest report, estimates that the organised gold loan (GL) market will reach the ₹15 trillion mark in the current financial year, a year earlier than previously anticipated.
The steady uptrend in gold prices, reaching new highs, is cited as the key driver behind this faster-than-expected growth. ICRA now projects the GL market size to rise to ₹18 trillion by FY2027.
“ICRA expects NBFC GL AUM to expand by 30–35% in FY2026, considering elevated gold prices and slower growth in unsecured loan products, which generally target the same borrower segments. Additionally, diversification by players into this space and the sizeable estimated free gold holdings in the country provide clear visibility for achieving this,” said A. M. Karthik, Senior Vice President and Co-Group Head, Financial Sector Ratings, ICRA Limited.
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