Muthoot FinCorp’s ₹4,000 crore IPO to be entirely fresh issue for business growth: CEO Shaji Varghese

Gold loan-focused non-banking finance company (NBFC) Muthoot FinCorp has recently received board approval to raise up to ₹4,000 crore through an initial public offering (IPO), subject to requisite regulatory approvals.

In an interview with Fortune India, Shaji Varghese, CEO of Muthoot FinCorp, said the fundraising is aimed entirely at supporting future business growth. The proposed IPO will comprise a fresh issue of equity shares with a face value of ₹10 each, with a minimum dilution of 10%.

“Our raw material and finished product are money, so we need more equity purely for growth capital,” Varghese said.

He added that Muthoot FinCorp, the flagship financial services company of the 139-year-old Muthoot Pappachan Group, intends to utilise the capital primarily for expanding its lending operations rather than entering entirely new business segments.

“The proceeds will predominantly be used for our existing lending businesses, including branch expansion and technology enablement,” he said.

The non-bank lender currently operates more than 3,700 branches across India and plans to continue expanding gradually over the coming years.

Currently, two group companies of the Muthoot Pappachan Group - Muthoot Capital Services and Muthoot Microfin - are listed on domestic bourses. While Muthoot Capital Services went public in February 1995, Muthoot Microfin was listed in December 2023.

Gold loans anchor business growth

According to Varghese, the company has transformed from a predominantly gold loan player into a diversified NBFC with exposure across secured and limited unsecured lending segments.

“Gold loans will continue to remain our lead business and grow fast, but alongside, we are also building our mortgage loan and digital lending businesses,” he said.

Varghese noted that nearly 93% of the company’s current revenue still comes from gold loans, while the remaining contribution comes from non-gold lending products. However, he said the share of diversified products is steadily increasing.

Commenting on the impact of elevated gold prices and the government’s appeal to moderate gold purchases, Varghese said the development is unlikely to affect the company’s business model.

“We do not finance gold purchases. We only lend against existing jewellery,” he said, adding that India already has an estimated 30,000 tonnes of gold held by households, while annual imports are significantly lower.

He also highlighted a major shift in customer behaviour toward gold loans over the past few years.

“In the past, gold loans were viewed as a small-ticket emergency credit product. Today, with gold prices rising sharply, families are sitting on much higher wealth and are able to borrow larger amounts against gold,” he said.

Varghese added that gold loans have become a more formalised and widely accepted asset class, with even banks aggressively participating in the segment.

On asset quality, he said the company’s low gross non-performing assets (GNPA) and net non-performing assets (NNPA) are largely due to the inherent strength of the gold loan business.

“Gold loan defaults are historically very low because customers do not want to lose their jewellery. In many cases, it is also a family decision rather than an individual borrowing decision,” he said.

Varghese also highlighted the company’s growing focus on digitalisation, noting that nearly 98% of customer onboarding is now paperless and digital. He said the company continues to strengthen accessibility and customer reach across India, with the Muthoot FinCorp ONE app recording 72 lakh downloads.

“We disburse more than one crore loans annually, and a large part of the process has now been digitised,” he said.

FY26 consolidated disbursements rise to ₹1.68 lakh cr

The company closed FY26 on a positive note, supported by strong profitability and stable asset quality. Consolidated profit after tax (PAT) rose to ₹1,847.62 crore in FY26, while consolidated revenue for the fiscal stood at ₹11,227.80 crore. The group’s consolidated assets under management (AUM) increased to ₹73,448.82 crore as of March 31, 2026.

“In FY26, Muthoot FinCorp and its subsidiaries crossed ₹1.68 lakh crore in disbursements, becoming a preferred financial partner to more than one crore families across India,” he said.

On a standalone basis, Muthoot FinCorp reported AUM of ₹56,185.10 crore, PAT of ₹1,640.21 crore and revenue of ₹8,364.28 crore for FY26.

During Q4 FY26, the company reported consolidated PAT of ₹664.03 crore and revenue of ₹3,355.97 crore. Revenue rose 31.91% year-on-year, while PAT surged 203.89% compared with the year-ago period.

The standalone entity also maintained healthy asset quality metrics, with gross non-performing assets (GNPA) at 1.03% and NNPA at 0.57%. Return on assets (RoA) improved to 4.16%, up 121 basis points year-on-year.

Going ahead, Varghese said the company has built internal capacity to sustain nearly 25% growth momentum over the medium term while aiming to maintain RoA in the range of 4-4.5%.