MUTHOOTCAPNSESeptember 30, 2025

Muthoot Capital Services Limited

10,008words
117turns
10analyst exchanges
4executives
Management on call
Tina Muthoot
EXECUTIVE DIRECTOR – MUTHOOT CAPITAL SERVICES LIMITED
Mathews Markose
CHIEF EXECUTIVE
Ramandeep Gill
CHIEF FINANCIAL OFFICER – MUTHOOT CAPITAL SERVICES LIMITED
Mohit Oza
ELARA SECURITIES PRIVATE LIMITED
Key numbers — 40 extracted
48.12 lakh
out 2-wheelers here because that's our principal business. So that overall retail sales in Q1 was 48.12 lakhs, which fell down drastically to 40.16 lakhs, which is a 16% drop in overall numbers in Q2. And t
40.16 lakh
ipal business. So that overall retail sales in Q1 was 48.12 lakhs, which fell down drastically to 40.16 lakhs, which is a 16% drop in overall numbers in Q2. And that mirrored our numbers as well. So we had
16%
verall retail sales in Q1 was 48.12 lakhs, which fell down drastically to 40.16 lakhs, which is a 16% drop in overall numbers in Q2. And that mirrored our numbers as well. So we had the total disburs
INR623 crore
overall numbers in Q2. And that mirrored our numbers as well. So we had the total disbursement of INR623 crores in Q1, which came down to INR521 crores in Q2, which is exactly 16%. However, the silver lining
INR521 crore
our numbers as well. So we had the total disbursement of INR623 crores in Q1, which came down to INR521 crores in Q2, which is exactly 16%. However, the silver lining on this was that our own MCSL business w
12%
h is exactly 16%. However, the silver lining on this was that our own MCSL business was down only 12% from INR504 crores to INR442 crores. In fact, it was a dip in our co-lending share from INR119 cr
INR504 crore
tly 16%. However, the silver lining on this was that our own MCSL business was down only 12% from INR504 crores to INR442 crores. In fact, it was a dip in our co-lending share from INR119 crores to INR79 cror
INR442 crore
the silver lining on this was that our own MCSL business was down only 12% from INR504 crores to INR442 crores. In fact, it was a dip in our co-lending share from INR119 crores to INR79 crores, which was 3
INR119 crore
only 12% from INR504 crores to INR442 crores. In fact, it was a dip in our co-lending share from INR119 crores to INR79 crores, which was 34%, which led to a larger dip. And that dip is because we have now s
INR79 crore
R504 crores to INR442 crores. In fact, it was a dip in our co-lending share from INR119 crores to INR79 crores, which was 34%, which led to a larger dip. And that dip is because we have now sequentially redu
34%
es. In fact, it was a dip in our co-lending share from INR119 crores to INR79 crores, which was 34%, which led to a larger dip. And that dip is because we have now sequentially reducing the number
6%
But having said that, we were able to improve or reduce our slippage -- fresh slippage by 6%, but more importantly, increase our collection and normalization from the NPA pool by about 69%
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Guidance — 20 items
Mathews Markose
opening
“We hope to -- if things go right, continue to be -- as the trend is showing in the first 15 days of the month, we should end up disbursing anything around INR1,100 crores in Q3, which would be fairly close to what we had budgeted for.”
Ramandeep Gill
opening
“So which means that it's met with the 1 or 2 quarters ahead with good results to go, we will be able to increase our rating size from -- by a notch up.”
Ramandeep Gill
opening
“We are expecting around INR800 crores to INR850-odd crores, which will automatically help us in amortizing so many costs, plus at the same time, my total NII and the top line will grow at a faster rate.”
Maitri Shah
qa
“Why are we taking that step going forward?”
Maitri Shah
qa
“Going forward, are we going to see a more larger dip quarter-on-quarter happening on the co- lending side or it's going to stabilize right now where it is?”
Mathews Markose
qa
“It will be stabilized to the extent that whatever reduction is happening on the ICE is more or less getting occupied by -- covered by the EV side of the business.”
Mathews Markose
qa
“However, month-on-month there will be a reduction in the portfolio because the runoff -- this entire book of co-lending has been or largely has been 2-wheeler and the runoffs are fairly high.”
Maitri Shah
qa
“And will that start from the next quarter like quarter 3?”
Mathews Markose
qa
“Going forward, I think by November, we should be able to launch our used 2-wheeler business also, which will then again help us increase our yield.”
Mathews Markose
qa
“Q4 maybe the impact may be very small because the business will still take time, but going forward, it will improve.”
Risks & concerns — 10 flagged
We did dealer categorization and location categorization based on delinquency and perceived risk and all that.
— Mathews Markose
And we categorized locations into A, B, C, D and E categories, E being severe risk, where we completely stopped business and the other categories where we had kept restrictions.
— Mathews Markose
Looking forward, I think we also did a comparison on -- because of the impact of GST or the customers who were waiting for the GST announcement, September has been highly muted.
— Mathews Markose
Two, we applied risk-based pricing on our 2-wheeler portfolio, wherein we are able to price high-risk customers differently earlier.
— Mathews Markose
And they invariably fall in the slightly higher risk bucket.
— Mathews Markose
We were -- previously when we were in a scheme-based model, we would price everybody same irrespective of the risk profile.
— Mathews Markose
But now with the implementation of risk-based pricing, we are able to differently price the low-risk customer from a medium or a higher-risk customer.
— Mathews Markose
Tangibles, of course, are the things which we already mentioned and at the risk of being repetitive, I will again repeat.
— Mathews Markose
Two, the application of risk-based pricing, which has already seen a positive impact in the net yield.
— Mathews Markose
So please continue to engage with us and please continue to challenge us and please continue to support us.
— Mathews Markose
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Q&A — 10 exchanges
Q
Am I audible?
Management
Q
I have a few questions. Firstly, on the co-lending side. So, we mentioned that now we are reducing our partners. Any sort of reason for that? Why are we taking that step going forward?
Mathews Markose
Yes. Maitri? Yes. Yes. So yes, this is Matthews here. Thanks for the question. The reason why we are doing it is because the yield on the co-lending has been low, and we thought that it was not a very good effective use of our capital. So that's the conscious call. However, we continue to engage with partners on the EV side where our own business is not that high, and we've been able to generate borrowings in form of bonds and other means for impact funding for EV and anything related to green funding. So therefore, we continue the partnerships on the EV side, but our partnerships on the ICE h
Q
This is Prakash. Am I audible?
Mathews Markose
Yes, Mr. Prakash, you are. It looks like a good set of numbers compared to Q1. I had a question on opex. So opex in Q1 -- Q2 is higher than opex in Q1. So is anything being done to reduce opex? And can you share some details on what is being done? Sorry, I was on mute. So, I'll take it. So, there are two components through which we can say that the opex of the company has gone up. One is basically the incentive, which is we call it a sourcing incentive that we know that business -- the season is going to come. So, there are various incentive schemes, which we have already launched in Q2, where
Q
Thank you for this opportunity. I just have a broader question in terms of basically since Tina is also available on the call from the promoter’s family. So, what is their vision in terms of this company? Because this being a very large group and the listed company is a very small among the group, which is there. So, what is the vision for this company going forward? Because when I see from last three, four, five years, we are pretty languishing in terms of our requirement or our profitability. So if you can just throw some light, that would be very, very helpful.
Mathews Markose
Okay. I'll take that question. So the longer-term vision, if you have read our motto, we say turning wheels and changing lives. So our vision is to be able to do eventually everything on wheels -- to be able to finance everything on wheels, from -- 2 years back, we were just a 2- wheeler loan company. From there, we today already have a series of products like we have a used car, we have used commercial vehicles. We are launching construction equipment’s this month. By October end, we would have launched construction equipment. And by December, we would have launched used 2-wheeler. We have an
Q
Okay, thank you.
Mathews Markose
No, he may ask. No problem. We are happy to connect with you even offline on anything if you want to have.
Q
Sir, I just skipped a point on the figure, you said about INR800 crores to INR850 crores. So what exactly is that?
Mathews Markose
Disbursement in new business. Disbursement of INR800 crores to INR850 crores you are expecting all right? Q3, yes. Q3 onwards, all right. Is there any other figure? No. So I said we are talking about 2 numbers, an aggressive number of about INR1,000 crores, INR1,100 crores because we don't know how the season is going to pan out. But otherwise, on a conservative note, we should drop INR800 crores to INR850 crores.
Q
So sir, what I'm not able to understand is that how come are you expecting INR30 crore quarterly PAT for coming quarters when you are expecting around 2% credit cost?
Ramandeep Gill
Okay. I'll just like to tell a few numbers now. First of all, I'm expecting -- I was expecting for the whole year to operate on a 2 percentage ROA, which is the minimum basic requirement, right? Then second thing is in order to operate that, the basic number is that, yes, we have to achieve a PAT of around INR60-odd crores, okay? This is second. Third thing is when our credit cost, which used to eat more chunk, right, if you see INR24 crores was my -- sorry, INR26 crores was my impairment cost as a stand-alone cost in Q2. That has been brought down to INR16 crores in Q3 -- sorry, in Q2. In Q1,
Q
Sir, I just wanted to fundamentally understand that our gross slippage number seems quite high, and we're growing at a really fast pace. So what is giving us the comfort at such high gross slippages? Why are we growing at such a high rate? Are we comfortable with the quality of underwriting that we are doing?
Mathews Markose
I will take that question. So I think this is exactly what Raman was explaining the gross slippages have reduced in Q2 over Q1, and Q1 was an aberration. So Q1 was a clear aberration and Q2, we have been able to recover. Q3 and Q4, generally, as an industry trend, slippages reduce and collections improve, and we are hopeful that it will continue. Sir, if I look at it as a percentage still, see, it's about INR42 crores is a gross slippage on an AUM of about INR3,200 crores, of which I think about 25% is co-lending. So the direct book is about INR2,400 crores. So the annualized gross slippage nu
Q
Mr. Raman, you mentioned that in Q2, the opex went up because of collection fees. You spend more money on collection because you -- to try to recover the bad loans or something. So this is not about Q2, but about FY '25. So if I look at FY '25 numbers, about INR300-odd crores are collected in the entire year by Muthoot FinCorp and external agencies. And the collection fees paid out is about INR35 crores. So we are paying out 12% on collection fees, 12% on the collection done by Muthoot FinCorp and external agencies. And how do we make money on that because our NIM is maybe 10% or 9% or somethi
Ramandeep Gill
No, Mr. Prakash just one fact check. All the recoveries which we are receiving in the Muthoot FinCorp branches. On that, we are paying only 0.50 percentage, not more than that. I don't know from where this number of 12 percentage has come. So 0.50 percentage, we are paying to Muthoot FinCorp number. Right... On the agency side, I have already explained the last 5 quarters, we used to operate at one number of INR8 crores, INR8.5 crores to INR12.6 crores in Q4 to INR15.6 crores in Q1. Now that has gone up to INR21.60 crores in Q2. So Muthoot FinCorp payment wise, it remains 0.50 percentage only.
Q
Yes. So thank you very much for all of you for participating in this earnings call. And as usual, it's always a pleasure interacting with you. Your questions and the challenges that you pose on us encourages us for the next quarter and way forward. So please continue to engage with us and please continue to challenge us and please continue to support us. Your support and encouragement means a lot to us. And we will -- on behalf of the management and the entire Muthootians at MCSL, I assure you that we are and we will be working hard to make every penny that you invest in us count and give you
Management
Speaking time
Mathews Markose
29
Ramandeep Gill
25
Prakash
19
Maitri Shah
14
Moderator
12
Anant Mundra
8
Pranay Zaveri
3
Raaj
3
Mohit Oza
2
Tejas Khandelwal
2
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Opening remarks
Mohit Oza
Yes. Thank you, Ikram. Good morning, everyone. On behalf of Elara Securities, we welcome you all to Q2 FY '26 Earnings Conference Call of Muthoot Capital Services Limited. From the esteemed management, we have with us today Ms. Tina Muthoot, Executive Director; Mr. Mathews Markose, CEO; Mr. Ramandeep Gill, CFO. We express our gratitude towards the esteemed management of Muthoot Capital to provide us with the opportunity to host this conference call. Without further ado, I now hand over the call to Mr. Mathews Markose, CEO, for his opening remarks, post which we can open the floor for Q&A. Thank you, and over to you, sir.
Mathews Markose
Okay. Thank you. Good morning, everyone, and thanks for joining the earnings call of Muthoot Capital. Our Q2 was a mixed bag for us. When I say mixed bag, the reason why I call it a mixed bag is because while we were able to reverse the trend of loss that we had done in Q1 and get back into profits, many of the macro fundamentals were not so conducive for business. So I'll cover it one by one. Overall, in Q1, the retail vehicle sales, and I talk about 2-wheelers here because that's our principal business. So that overall retail sales in Q1 was 48.12 lakhs, which fell down drastically to 40.16 lakhs, which is a 16% drop in overall numbers in Q2. And that mirrored our numbers as well. So we had the total disbursement of INR623 crores in Q1, which came down to INR521 crores in Q2, which is exactly 16%. However, the silver lining on this was that our own MCSL business was down only 12% from INR504 crores to INR442 crores. In fact, it was a dip in our co-lending share from INR119 crores to
Ramandeep Gill
Thank you, Mathews sir. Very good morning, everybody. So we'll take you through a few numbers and the analysis part of it, and then we can move on to questions. In this quarter, we did -- as far as the sourcing is concerned, the new business, we have closed this quarter with INR535 crores of business, while acquiring 51,288 as our new customers. This has taken our customer base to 570,000 plus now. And this has also taken our AUM to INR3,284 crores, marking a year-on-year growth of 40 percentage to our AUM. This has helped the company to take the total balance sheet size to INR3,731 crores now. The overall GNPA and the NNPA we will talk. So we have splitted this GNPA and NNPA first time into two parts now. One is basically on the POS. Second is with the interest accrual. On POS, we are -- we have reported a GNPA of 5.94 percentage, whereas with interest accrual, we have reported a 6.46 percentage. While the NNPA is concerned, on POS, we have reported 2.46 percentage, whereas interest a
Mathews Markose
One thing which I missed mentioning is the fact that during the quarter, CRISIL has given -- upgraded our outlook on rating from stable to positive while maintaining the rating at A+. So that's a positive thing, which I missed mentioning, Raman. Yes. Over to you Mohit.
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