Muthoot Microfin Limited

Financial Services — Credit Services · NSE

₹174.53+₹1.30 (+0.75%)

DalalBaazaar Score

65 / 100

🟢 Good

Verdict

NEUTRAL

Risk

Moderate

Driven by negative free cash flow, micro-cap size, which brings thin liquidity.

In simple words: The business is earning a fairly low return on the money invested in it, with both sales and profits growing well. Cash generation is currently the main factor to watch.

Decision support, not a buy or sell call.

As of 18 Oct 2026, 7:49 pm

Understanding the Business

Company site ↗

The 60-second version of Muthoot Microfin Limited — what it does, how it earns, and who it competes with, before any of the numbers below.

What does this company do?

Muthoot Microfin Limited, a non-deposit taking non-banking financial company, provides micro loans to women entrepreneurs in rural regions of India.

IndustryCredit Services

SectorFinancial Services

Employees15,639

Annual revenue₹2,206 Cr

How does it make money?

Turns over ₹2,206 Cr a year. Of every ₹100 of sales, about ₹8 reaches shareholders as profit, with ₹22 left at the operating level before interest, tax and depreciation. Each of its 15,639 employees supports ₹14.1 lakh of revenue a year, the signature of a people-led business.

Revenue / employee₹14.1 lakh

Who are its competitors?

The closest listed comparisons in its industry are BAJAJ FINANCE LIMITED, STATE BANK OF INDIA, HDFC BANK LTD, ICICI BANK LTD.. These are the companies its valuation and returns are measured against elsewhere in this report.

Compared side by side in Peers ↓

What is its competitive advantage?Not assessable from these ratios

For a lender, returns on capital are shaped by leverage and funding cost rather than by pricing power, so the usual financial signature of an advantage does not apply. Judge this one on deposit franchise, cost of funds and asset quality — none of which are in this data.

Peer median ROE16.5%

What is the outlook?

3 analysts covering the stock expect revenue to grow about 21.6% and earnings to grow about 54.3% in the year to 2028. These are estimates by people who follow the company, not a forecast for the wider industry.

Est. revenue growth+21.6%

Est. earnings growth+54.3%

Analysts3

What has been driving growth?

Growth has come mainly from selling more, rather than from keeping more of each sale. Over 3 years revenue moved +71% while net margin moved -39% relative to itself. What this cannot tell you is which products, customers or geographies did the work — that lives in the segment disclosures of the annual report.

Revenue effect+71%

Margin effect-39%

DalalBaazaar Score

65/ 100

Good

Weighted across six categories. Every point is explained below.

✓ Beta of 0.69 — historically steadier than the index
✗ Micro Cap: thinner liquidity and sharper drawdowns are normal
✗ Profits have swung sharply from year to year — earnings are hard to forecast
✗ Negative free cash flow means dependence on external funding

Quality vs. Valuation

Company Quality

68/ 100

Good

How good the business is, ignoring the share price entirely.

Valuation

51/ 100

Fair

What you are being asked to pay, ignoring how good the business is.

A reasonable business at a reasonable price — neither the quality nor the valuation stands out in either direction.

Historical Valuation

Current P/E

12.0x

3Y Median

6.4x

36 monthly readings · mean 11.3x · range 4.1x–26.4x

Sector Median

17.0x

median of 4 sector peers

⚠️Current valuation is approximately 87% above its 3y median of 6.4x. Paying more than usual needs a reason — faster growth, a better balance sheet, or a re-rating you believe in.

🟢Against its sector it trades 29% below the peer median of 17.0x.

vs. its own history

Expensive

6.4x median over 36 months · +87%

vs. sector peers

Cheap

17.0x median of 4 peers · -29%

vs. generic bands

Cheap

Below 15x

EV/EBITDA

25.1x

PEG

9.39

What's Good / What's Bad

🟢 What's Going Well0

Nothing stands out as clearly improving on the years of data available.

🔴 What Needs Attention1

Return on equity is falling
ROE has dropped from 10.1% to 6.0% — each rupee of shareholder capital earns less than it did.

Red Flags

1 item require attention · 1 watch

🟡Margins are compressingFinancial
EBITDA margin is down 2.2 points over 3 years.

Investment Thesis

🟢 Bull CaseWhat could make this work?

Cheaper than its peers
It trades 29% below the sector median. Either the market sees a problem the numbers do not show, or the discount closes.

🔴 Bear CaseWhat could go wrong?

Margins are being competed away
EBITDA margin has fallen from 23.7% to 21.5%. If the trend continues, profit falls even on flat sales — and margin decline rarely reverses quickly.
The price already assumes success
The stock trades 87% above its own median multiple. At this level the business has to deliver just to stand still, and a stumble is repriced twice — lower earnings on a lower multiple.
Returns on shareholder capital are falling
ROE has dropped from 10.1% to 6.0%. Each rupee of equity earns less than it did, so profit growth increasingly depends on raising more capital rather than on the existing base working harder.
Earnings are hard to forecast
Profit has swung sharply from year to year, so any single year — good or bad — is a weak guide to the next. Cyclical earnings deserve lower multiples for that reason.
Size brings its own risk
Micro Cap businesses are thinly traded, so exits are harder in a falling market and single events move the price more than they would for a larger company.

🟡 Key Things to WatchMeasurable tripwires, set against where this company stands today

1Revenue growth stays above 15% a year✓ 19.5% CAGR
Latest reported year was 48.3%. The bar is set below the established compounding rate, so ordinary variation does not trip it.
2EBITDA margin holds above 20%✓ 21.5%
Two points below today's level — enough room for noise, tight enough to catch real compression.
3Return on equity stays above 8%✗ 6.0%
For a lender this is the cleanest single read on whether the book is being grown profitably.
4Valuation vs its own median of 6.4x✗ 12.0x today
A re-rating above its own history needs a reason; without one it is just a higher price.

Investment Checklist

7 / 12 checks passed

✗ Strong return on equity (ROE ≥ 15%)
✗ Strong return on capital employed (ROCE ≥ 15%)
✓ Healthy net margin (≥ 10%)
✗ Generates positive free cash flow
✗ Manageable leverage (Debt/Equity < 1.0)
✓ Adequate short-term liquidity (Current Ratio ≥ 1.0)
✓ Revenue growing year-over-year
✓ Profit growing year-over-year
✓ Not trading at an extreme valuation (P/E < 40x)
✓ Not buying right at the 52-week high
✓ Analyst consensus isn't majority-sell
✗ Short-term technical trend isn't bearish

Price history

Quick Metrics

5 good · 2 neutral · 4 weak

Market Cap

₹2,928 Cr

Micro Cap

Smaller company — thin liquidity and deep drawdowns are normal here

P/E (Trailing)

12.0x

Cheap

Cheap against the generic band

P/B Ratio

1.03x

Reasonable

Reasonable against the company's book value

EPS (TTM)

₹14.52

Profitable

Profitable on a per-share basis

ROE

6.0%

Weak

Weak capital efficiency

ROCE

3.1%

Weak

Low return on total capital employed

Debt/Equity

3.41x

High

High leverage

Revenue Growth (YoY)

48.3%

Healthy

Healthy top-line growth

Profit Growth (YoY)

1241.7%

Healthy

Profits growing at a healthy clip

Dividend Yield

None

No dividend yield reported — usually means no payout, but verify if one was recently initiated

Free Cash Flow

-₹591 Cr

Cash burning

Spending more cash than the operations bring in

More Metrics

P/E (Forward)

5.7x

Improving

Below the trailing multiple — the street expects earnings to grow into the price

Operating Margin

32.1%

Good

Healthy core-business profitability

Net Margin

21.0%

Good

Strong bottom-line conversion

Current Ratio

1.31

Comfortable

Healthy short-term liquidity

Beta (vs Nifty)

0.69

Defensive

Steadier than the market

52W Range Position

27%

Mid-range

Technical Snapshot

SMA 20 / SMA 50

177.7 / 194.6

Bearish alignment (short < long)

Price vs SMA 200

Below

Long-term downtrend

RSI (14)

39.9

Neutral momentum

Financial Trend (4-Year)

Metric	FY23	FY24	FY25	FY26	3Y CAGR
Revenue	₹1,291 Cr	₹1,984 Cr	₹2,430 Cr	₹2,206 Cr	+19.5%
EBITDA	₹306 Cr	₹556 Cr	₹211 Cr	₹475 Cr	+15.8%
EBITDA Margin	23.7%	28.0%	8.7%	21.5%	—
PAT (Net Profit)	₹164 Cr	₹450 Cr	-₹223 Cr	₹170 Cr	+1.3%
EPS	₹9.61	₹30.25	₹-13.29	₹10.15	+1.8%
ROE	10.1%	16.0%	-8.5%	6.0%	—
ROCE	5.0%	9.6%	-4.4%	3.1%	—
Total Debt	₹6,623 Cr	₹8,589 Cr	₹8,101 Cr	₹9,707 Cr	+13.6%
Free Cash Flow	-₹2,361 Cr	-₹1,299 Cr	₹1,361 Cr	-₹591 Cr	—

🟢 Revenue has grown at 19.5% a year over 3 years.

🟢 EBITDA has grown at 15.8% a year over 3 years.

🔴 EBITDA Margin has fallen from 23.7% to 21.5% over 3 years (-2.2 pts).

🟡 PAT (Net Profit) has been broadly flat over 3 years (1.3% a year).

🟡 EPS has been broadly flat over 3 years (1.8% a year).

🔴 ROE has fallen from 10.1% to 6.0% over 3 years (-4.1 pts).

🔴 ROCE has fallen from 5.0% to 3.1% over 3 years (-1.9 pts).

🔴 Total Debt has grown at 13.6% a year over 3 years.

Balance Sheet & Cash Flow — FY2026

Total Assets

₹12,685 Cr

Total Liabilities

₹9,830 Cr

Cash & Equivalents

₹701 Cr

Operating Cash Flow

-₹580 Cr

Capex

-₹11 Cr

Shareholding (proxy)

Institutional Holding

7.9%

Insider Holding

73.4%

Analyst Consensus

Recommendations

3 Buy · 0 Hold · 0 Sell

Target Price (Mean)

₹236.67

+35.6% vs CMP

Target Range

₹205 – ₹270

Peer Comparison

Company	P/E	ROE
BAJAJ FINANCE LIMITED	30.2x	17.8%
STATE BANK OF INDIA	10.3x	15.2%
HDFC BANK LTD	15.9x	13.8%
ICICI BANK LTD.	18.1x	16.5%

Recent News

4 mixed2 general

Muthoot Microfin (NSEI:MUTHOOTMF) - Stock Analysis

Simply Wall Street, 16 Oct

Muthoot Microfin zooms 16% on strong Q1 biz update; stock hits 52-week high

Business Standard, 10 JulResults

🟡Mixed / dependsA results event. The figures on this page update once the new statements reach the data feed, which usually lags the announcement.

MUTHOOTMF Forecast — Price Target — Prediction for 2027

TradingView, 26 JunAnalyst view

🟡Mixed / dependsBroker commentary — an opinion about the price rather than new information about the business.

Muthoot Microfin shares jump 16.5% in biggest one-day gain in over a year after Q1 business update

Livemint, 10 JulPrice move

🟡Mixed / dependsA price move, which is not by itself a change in the business. Worth finding the cause before reading it as either good or bad.

Muthoot Microfin grew 13% when the industry shrank 20%; CEO explains what's next

The Economic Times, 07 May

Muthoot Microfin Q2 update: AUM growth of 22%, cost of funds decline from June quarter

CNBC TV18, 08 OctResults

🟡Mixed / dependsA results event. The figures on this page update once the new statements reach the data feed, which usually lags the announcement.

Watch Items

This is a financial-sector business: borrowing is its raw material, not leverage in the usual sense. Debt/Equity and ROCE here aren't comparable to a manufacturer's — read them alongside NIM, GNPA and capital adequacy from the company's own disclosures.
Cross-check against the company's latest quarterly filing / investor presentation before acting.

DalalBaazaar Thesis

StrongBusiness Quality · Financial Health · Valuation

MiddlingGrowth · Profitability

WeakRisk

Points for each in the Score ↑

Good business at a fair price

A sound business at a reasonable valuation. Suitable for a long-term holding, with the valuation and the direction of margins worth watching rather than the business itself.

2 of 4 tripwires tripped — Return on equity stays above 8%; Valuation vs its own median of 6.4x · see Key things to watch ↑