Proceeds of MFL’s ₹4K cr IPO to be used for biz growth: CEO

Muthoot FinCorp Ltd’s (MFL) proposed initial public offering (IPO) of up to Rs 4,000 crore is driven by the strong growth momentum in gold loans, regulatory clarity and increasing formalisation of the gold loan sector, a top official said.

Shaji Varghese, CEO, emphasised that the proceeds of the IPO, comprising a fresh issue of equity shares, would primarily be used for business growth.

“Since the growth momentum is good and is expected to continue, I think the timing of the IPO is apposite. This money is for growth.

“There is no private equity investor on board with us. We didn’t want to involve only the promoter family (for capital purposes). So, the IPO is for raising primary money,” he said.

As at March-end 2026, the gold loan company’s standalone assets under management (AUM) jumped 75 per cent year-on-year (yoy) to Rs 56,185 crore from Rs 32,055 crore as at March-end 2025.

Net profit in FY26 shot up 108 per cent yoy to Rs 1,640 crore from Rs 787 crore in FY25.

The surge in gold prices has boosted the business, with the average gold loan ticket size rising to around Rs 1.85 lakh as at March-end 2026 from nearly Rs 1.20 lakh last year.

MFL’s CEO underscored that gold loan is now a very well accepted category of loan. In the past, it was taken only as a last resort.

Referring to new RBI regulations effective April 1, 2026, whereby lenders are also required to classify gold loans into income-generating and non-income-generating categories, Varghese estimated that nearly 70 per cent of MFL’s gold loan portfolio could qualify as income-generating.

Income-generating loans, including MSME and agricultural-linked, can open up direct assignment opportunities for the company to assign such loans to banks and unlock liquidity.

The MFL chief noted that RBI’s revised regulations also provides greater flexibility on loan-to-value (LTV) ratios and repayment structures for income-generating loans, including longer-tenure EMI-based products extending beyond 12 months.

So, income-generating gold loans are assessed based on the borrower’s repayment capacity, income assessment, credit underwriting standards and underlying collateral value.

“So, the regulator is definitely encouraging more income generating loans. Now, we can even give a 3 year or 4 year loan.

“Clearly, income is going to decide the loan eligibility alongside the security, credit policy and the risk appetite of the company,” the MFL Chief said.

Varghese opined that if the current loan growth momentum continues, the NBFC, which is a non-deposit taking, middle layer NBFC, could potentially cross the Rs 1 lakh crore AUM threshold required for getting categorises as an upper-layer NBFC in the next couple of years.