By BullScreen Editorial Team 
Muthoot Microfin Limited reported a sharp rise in profitability in its Q4 results 2026, driven by lower borrowing costs, improving asset quality, and a strategic shift toward secured business lending.
The company posted a net profit after tax (PAT) of ₹711 million in Q4 FY26, up 117.7% year-on-year, while full-year PAT surged 176.5% to ₹1,703 million. However, total income for FY26 declined 7.2% YoY to ₹23,807 million, reflecting a softer lending environment across the microfinance sector.
Muthoot Microfin’s net interest margin improved to 12% in Q4 FY26, expanding 104 basis points from a year ago. The company also strengthened operating efficiency, with its cost-to-income ratio falling sharply to 53.2% from higher levels last year. The opex ratio eased to 6.4%.
In the Q4 results 2026 update, the lender highlighted strong growth in assets under management (AUM), which rose 13.3% YoY to ₹140,056 million. Quarterly disbursements climbed 46.8% to ₹28,767 million, indicating improving credit demand.
The company is gradually reducing dependence on traditional joint liability group (JLG) microfinance loans and expanding into MSME and secured lending products. Secured business loan balances jumped 256%, while average ticket size increased 28% to ₹74,079.
Asset quality also improved during the quarter. Gross NPA declined to 3.89% from 4.84% a year earlier, while net NPA improved to 1.14%. Credit cost reduced to 2.8%, supported by stronger collections and wider adoption of digital repayment mandates.
Muthoot Microfin maintained a strong capital adequacy ratio of 23.9% and reduced its borrowing cost by 75 basis points to 10.27% in FY26. The company said its Vision 2030 strategy aims to diversify the portfolio further, with MSME and secured loans expected to become the dominant segment over the coming years.
| Metric | FY26 / Q4 FY26 Data | YoY Change |
|---|---|---|
| Total Income | ₹23,807 Million | ▼ 7.2% |
| Net Profit (PAT) FY26 | ₹1,703 Million | ▲ 176.5% |
| Q4 FY26 PAT | ₹711 Million | ▲ 117.7% |
| Net Interest Margin (NIM) | 12.0% | ▲ 104 bps |
| Cost-to-Income Ratio | 53.2% | ▼ 842 bps |
| Opex Ratio | 6.4% | ▼ 25 bps |
| Return on Assets (ROA) | 2.1% | Strong Expansion |
| Return on Equity (ROE) | 10.1% | Sharp Recovery |
| Capital Adequacy Ratio (CAR) | 23.9% | Strong Capital Base |
| Metric | FY26 Performance | Trend |
|---|---|---|
| Assets Under Management (AUM) | ₹140,056 Million | ▲ 13.3% |
| Q4 Disbursements | ₹28,767 Million | ▲ 46.8% |
| Total Borrowings | ₹95,374 Million | Record High |
| Cost of Borrowing | 10.27% | ▼ 75 bps |
| Customer Retention | 95% | Stable |
| Average Ticket Size | ₹74,079 | ▲ 28% |
| Secured Business Loan Growth | ₹9,315 Million | ▲ 256% |
| Branch Network | 1,670 Branches | Optimized Network |
| Metric | Q4 FY26 Data | Improvement |
|---|---|---|
| Gross NPA (GNPA) | 3.89% | Improved from 4.84% |
| Net NPA (NNPA) | 1.14% | Improved from 1.34% |
| Credit Cost | 2.8% | Lower YoY |
| Provision Coverage Ratio (PCR) | 71.5% | Healthy Coverage |
| Digital Collections Mix | 33.9% | Increased Adoption |
| Collection Efficiency (MSEL) | 100% | Best-in-Class |
| NACH Recovery by T+3 | 99.9% | Strong Recovery Rate |
| Covenant Breaches | Zero | Strong Balance Sheet Discipline |
Source: https://www.bseindia.com/xml-data/corpfiling/AttachHis/b5f8ab02-b0b3-4a5a-ab99-eea59512017a.pdf