Muthoot Finance Ltd Falls 3.22%: 3 Key Factors Driving This Week’s Decline

16 February 2026: Intraday Price Pressure Amid Market Gains

On 16 February, Muthoot Finance Ltd experienced significant selling pressure, with its stock price falling 2.21% to close at Rs.3,497.75. The shares touched an intraday low of Rs.3,450, marking a 3.54% drop from the previous close. This decline occurred despite the Sensex rallying 0.70% to 36,787.89, driven by mega-cap stocks. The stock’s underperformance highlighted sector-specific pressures within the NBFC space, diverging from the broader market’s positive momentum.

Technically, the stock was trading below its short- and medium-term moving averages, signalling weakening momentum. The two-day losing streak culminating on this day resulted in a cumulative 14.75% decline, underscoring immediate profit booking and resistance at key technical levels. Despite this, the stock remained above its 200-day moving average, indicating some long-term support.

Technical Momentum Shifts Reflect Mixed Signals

The same day, technical analysis revealed a nuanced shift in momentum for Muthoot Finance. The weekly MACD turned mildly bearish, and Bollinger Bands indicated increased volatility and downward pressure. Conversely, monthly indicators remained bullish, suggesting sustained long-term strength. The daily moving averages showed mild bullishness, supporting short-term resilience despite the sharp intraday correction.

Volume analysis via the On-Balance Volume (OBV) indicator remained positive, signalling ongoing accumulation despite price weakness. This divergence between short-term caution and long-term optimism is typical during market consolidations following strong rallies. The stock’s Mojo Score of 84.0 and upgraded Strong Buy rating from MarketsMOJO reaffirmed confidence in its fundamentals amid this technical complexity.

17 February 2026: Valuation Shifts Signal Renewed Price Attractiveness

On 17 February, Muthoot Finance’s valuation metrics reflected a notable recalibration, shifting from an expensive to a fair valuation grade. The price-to-earnings (P/E) ratio moderated to 16.12, significantly lower than peers such as Bajaj Finance (34.58) and Bajaj Finserv (32.9). The price-to-book value (P/BV) ratio stood at 3.94, while the EV/EBITDA multiple was 12.49, indicating a more balanced risk-reward profile.

The company’s PEG ratio of 0.21 was particularly compelling, suggesting undervalued earnings growth relative to price, contrasting with higher PEGs of sector peers. Profitability metrics remained strong, with a return on capital employed (ROCE) of 13.02% and return on equity (ROE) of 24.47%, underscoring operational efficiency. Dividend yield was modest at 0.74%, reflecting a balanced approach between shareholder returns and reinvestment.

This valuation shift came amid a 2.15% daily decline to Rs.3,499.70, yet the stock’s long-term price performance remained robust, with a 55.23% return over the past year, far outpacing the Sensex’s 9.66%. The recalibrated valuation offers a more attractive entry point for investors seeking exposure to the NBFC sector’s growth potential.

18–20 February 2026: Continued Volatility and Partial Recovery

On 18 February, the stock declined further by 1.15% to Rs.3,456.55, continuing the short-term downtrend amid mixed market conditions. The Sensex, however, advanced 0.43%, highlighting the stock’s relative weakness. The following day, 19 February, saw the stock fall 1.41% to Rs.3,407.90, coinciding with a 1.45% Sensex decline, reflecting broader market volatility.

On the final trading day of the week, 20 February, Muthoot Finance rebounded 1.57% to close at Rs.3,461.40, partially recovering from earlier losses. The Sensex also gained 0.41%, closing at 36,674.32. This late-week bounce suggests some stabilisation after a week of technical and valuation adjustments.

Key Takeaways

1. Divergent Price Action: Muthoot Finance’s shares declined 3.22% over the week, underperforming the Sensex’s 0.39% gain. The stock’s weakness amid a broadly positive market highlights sector-specific challenges and technical resistance.

2. Technical Complexity: Mixed technical signals across weekly and monthly timeframes indicate short-term caution but sustained long-term strength. Volume indicators suggest accumulation despite price weakness, supporting potential stabilisation.

3. Valuation Recalibration: The shift from expensive to fair valuation metrics, including a P/E of 16.12 and a PEG ratio of 0.21, enhances the stock’s price attractiveness relative to peers, signalling a more balanced risk-reward profile.

4. Long-Term Resilience: Despite short-term volatility, Muthoot Finance’s multi-year returns remain impressive, with a 10-year return exceeding 1,800%, underscoring its strong compounding ability and market leadership in the NBFC sector.

Conclusion

Muthoot Finance Ltd’s performance this week reflects a phase of technical consolidation and valuation adjustment amid broader market volatility. The stock’s underperformance relative to the Sensex was driven by intraday price pressures and mixed momentum signals, yet its long-term fundamentals and valuation appeal remain intact. Investors should note the nuanced technical landscape and improved valuation metrics as key factors shaping the stock’s near-term trajectory. While short-term caution is warranted, the company’s robust financial profile and strong multi-year returns continue to underpin its market standing within the NBFC sector.

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