Understanding the Current Rating
The Strong Buy rating assigned to Muthoot Finance Ltd indicates a high conviction in the stock’s potential for superior returns relative to its peers. This rating is based on a comprehensive evaluation of four key parameters: Quality, Valuation, Financial Trend, and Technicals. Each of these factors contributes to the overall assessment of the company’s investment appeal.
Quality Assessment
As of 11 February 2026, Muthoot Finance Ltd demonstrates excellent quality metrics. The company maintains a robust long-term fundamental strength, reflected in an average Return on Equity (ROE) of 20.04%. This level of ROE indicates efficient utilisation of shareholder capital to generate profits. Additionally, the company has sustained healthy growth in operating profit, expanding at an annual rate of 17.44%, underscoring its operational efficiency and resilience in the competitive NBFC sector.
Valuation Considerations
Currently, the stock is considered expensive based on valuation metrics. While the premium valuation may appear cautious to some investors, it is often justified by the company’s consistent earnings growth and strong market position. The elevated valuation reflects market confidence in Muthoot Finance’s ability to sustain its growth trajectory and deliver superior returns over the medium to long term.
Financial Trend and Performance
The latest data shows an outstanding financial trend for Muthoot Finance Ltd. The company reported a remarkable 82.53% growth in net profit in its September 2025 quarter, marking the tenth consecutive quarter of positive results. Profit Before Tax excluding other income (PBT LESS OI) surged to ₹3,194.40 crores, growing at an impressive 80.15%. Net sales reached a record ₹7,282.79 crores, while Profit Before Depreciation, Interest and Tax (PBDIT) hit a high of ₹5,803.23 crores. These figures highlight the company’s strong earnings momentum and operational leverage.
Technical Analysis
From a technical perspective, Muthoot Finance Ltd is currently rated as bullish. The stock has delivered consistent returns across multiple time frames: a 1-day gain of 0.99%, 1-week increase of 5.38%, 1-month rise of 2.66%, and a robust 3-month appreciation of 15.78%. Over six months, the stock surged by 51.70%, and year-to-date returns stand at 2.85%. Most notably, the stock has generated a stellar 79.28% return over the past year, outperforming the BSE500 index in each of the last three annual periods. This technical strength supports the positive outlook reflected in the current rating.
Institutional Confidence and Market Position
Institutional investors hold a significant 22.88% stake in Muthoot Finance Ltd, signalling strong confidence from knowledgeable market participants with extensive resources to analyse company fundamentals. Furthermore, the company ranks among the top 1% of all stocks rated by MarketsMOJO, securing the number one position among large caps and second overall across the entire market universe of over 4,000 stocks. This elite standing reinforces the stock’s appeal to investors seeking quality and growth.
Implications for Investors
For investors, the Strong Buy rating suggests that Muthoot Finance Ltd is well-positioned to deliver attractive returns supported by solid fundamentals, robust financial performance, and positive technical signals. While the stock’s valuation is on the higher side, the company’s consistent earnings growth, operational excellence, and market leadership justify this premium. Investors looking for exposure to the NBFC sector with a focus on quality and growth may find this stock a compelling addition to their portfolios.
Summary of Key Metrics as of 11 February 2026
- Mojo Score: 90.0 (Strong Buy)
- Market Capitalisation: Large Cap
- Return on Equity (ROE): 20.04%
- Operating Profit Growth (Annual): 17.44%
- Net Profit Growth (Latest Quarter): 82.53%
- Profit Before Tax (Excluding Other Income): ₹3,194.40 crores (80.15% growth)
- Net Sales (Latest Quarter): ₹7,282.79 crores
- PBDIT (Latest Quarter): ₹5,803.23 crores
- Institutional Holdings: 22.88%
- 1-Year Stock Return: 79.28%
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Sector and Industry Context
Muthoot Finance Ltd operates within the Non Banking Financial Company (NBFC) sector, a critical segment of India’s financial ecosystem. NBFCs play a vital role in providing credit and financial services to underserved segments, often complementing traditional banking institutions. The company’s strong fundamentals and consistent growth position it favourably amid evolving regulatory and economic conditions impacting the sector.
Long-Term Growth Prospects
The company’s sustained growth in net profit and operating metrics over recent quarters reflects its ability to capitalise on market opportunities and manage risks effectively. With a track record of positive results for ten consecutive quarters, Muthoot Finance Ltd has demonstrated resilience and adaptability. Its leadership in the large-cap NBFC space, combined with strong institutional backing, suggests a favourable outlook for continued expansion and shareholder value creation.
Conclusion
In summary, Muthoot Finance Ltd’s Strong Buy rating by MarketsMOJO, last updated on 11 August 2025, is supported by its excellent quality, outstanding financial trend, bullish technicals, and premium valuation justified by strong fundamentals. As of 11 February 2026, the company continues to deliver robust returns and maintain a leading position in the NBFC sector, making it a compelling choice for investors seeking growth and quality in their portfolios.
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