Muthoot Capital Services Bonds

Muthoot Capital Overview

Muthoot Capital is the vehicle-finance arm of the Muthoot Pappachan Group (MPG) and has the group's third-largest lending portfolio. It primarily finances two-wheelers but is expanding into cars and commercial vehicles. CRISIL upgraded its long-term rating to AA-/Stable in February 2026, reflecting stronger group linkages and support. However, profitability moderated in FY26 as credit costs increased, while GNPA rose to 6.96%.

Entity and business: Muthoot Capital is a deposit-taking, systemically important NBFC. Its lending portfolio includes two-wheeler, car and commercial vehicle loans, along with other retail and business financing. Two-wheeler loans accounted for approximately 86% of AUM in March 2026. By June 2026, the two-wheeler share was around 84%, with cars at 5.3% and commercial vehicles at 8%.

Promoters and group: Muthoot Capital is part of the Muthoot Pappachan Group, whose promoters have more than three decades of lending experience. The company has common promoters and promoter directors with other group companies and benefits from Muthoot Fincorp's branch network and customer base for loan origination and collections.

Corporate history: Incorporated in 1994, Muthoot Capital began operations in 1995 and commenced lending in 1998 after receiving its NBFC licence. It initially provided gold loans before entering two-wheeler finance and gradually exiting the gold loan business.

Lenders and funding: The company raises funds through bank facilities, listed NCDs, commercial paper, fixed deposits and securitisation. CRISIL's rated bank facilities stood at ₹2,500 crore, while Brickwork rated bank loan facilities of ₹3,500 crore in September 2026. Its bank lenders include PNB, SBI, IDFC FIRST Bank, Union Bank of India, Axis Bank and Indian Overseas Bank.

Scale: AUM stood at approximately ₹3,441 crore in March 2026, up around 12.5% year-on-year. It declined to ₹3,379 crore in June 2026 as the company reduced its co-lending exposure. Around 50% of the portfolio was concentrated in South India in March 2026, with Kerala accounting for 15.5%.

Performance (FY26): Total income was ₹633 crore and PAT was ₹11.2 crore, compared with ₹476 crore and ₹46 crore, respectively, in FY25. GNPA increased from 4.88% in March 2025 to 6.96% in March 2026. It subsequently declined to 3.94% in June 2026 following an ARC transaction.

Muthoot Capital Key Metrics at a Glance

Muthoot Capital has an adequate capital position, with net worth of ₹670 crore and CRAR of 22.04% as of March 2026. However, adjusted gearing increased to 5.1x, while profitability moderated to a return on managed assets (RoMA) of 0.3% in FY26. In Q1 FY27, the company reported PAT of ₹8.1 crore and RoMA of 0.8% on an annualised basis.

Note: The June 2026 GNPA reduction followed an ARC transaction. It should not be interpreted as an equivalent improvement in underlying borrower collections.

History of Muthoot Capital Services

Muthoot Capital Services was incorporated in 1994 as part of the Muthoot Pappachan Group and began operations in 1995. After receiving its NBFC licence in 1998, it commenced lending with gold loans and entered the two-wheeler financing business in the same year.

As the group expanded its gold financing operations through Muthoot Fincorp, Muthoot Capital gradually exited gold lending and focused on vehicle finance. Two-wheelers became its core product, although the company has since diversified into used cars and commercial vehicles.

The company has also expanded beyond its traditional South Indian markets. The southern states accounted for approximately 83% of its portfolio in March 2018, compared with around 50% in March 2026. Kerala's share declined from 42% in March 2019 to 15.5% in March 2026.

During FY25 and FY26, Muthoot Capital expanded its non-two-wheeler offerings and strengthened its management team. It also reduced its co-lending exposure, which moderated AUM growth in FY26.

Muthoot Capital Board of Directors and Key Management

Muthoot Capital's board includes promoter-group representatives and independent directors. Following changes in July 2026, the board includes Tina Suzanne George as Whole-Time Director and Manimekhalai A as an Independent Director.

Key management:

• Mr. Mathews Markose: Chief Executive Officer
• Mr. Ramandeep Singh: Chief Financial Officer
• Ms. Deepa G: Company Secretary and Compliance Officer
• Ms. Umadevi: Chief Risk Officer

Note: Mr. Thomas Mathew, who was an Independent Director, resigned effective 7 July 2026. Ms. Manimekhalai A was appointed as an Independent Director from 16 July 2026. The current board list should be checked against the latest MCA filings before publication.

Muthoot Capital Shareholding Pattern

The promoter group held 63.33% of Muthoot Capital as of September 2026. Foreign institutional investors held 1.24%, while domestic institutional investors held 1.01%. The remaining 34.42% was held by public shareholders and other non-promoter investors.

Muthoot Capital Financials

Muthoot Capital's total income increased to ₹633 crore in FY26 from ₹476 crore in FY25. However, PAT declined to ₹11.2 crore from ₹46 crore, primarily due to higher credit costs and compression in net interest margins. Credit costs increased to 2.0% in FY26 from 0.7% in FY25.

Asset quality also weakened during the year, with GNPA rising to 6.96% from 4.88%. The company reported a subsequent reduction to 3.94% in June 2026 after an ARC transaction. Adjusted gearing increased to 5.1x in March 2026 from 4.3x a year earlier.

Q1 FY27 RoMA is annualised. The June 2026 GNPA figure reflects the impact of an ARC transaction. AUM figures are rounded and may differ slightly across CRISIL reports. FY23 and FY24 AUM, FY23–FY25 CRAR and earlier net-worth figures have been left blank where the cited comparable rating table does not provide them.

Muthoot Capital Key Strengths

1. Equity Listed: Listed company on both NSE and BSE (AUM ₹78,000+ cr).
2. Strong Parent: MCSL benefits from strong operational, managerial, and financial support from the Muthoot Pappachan Group (MPG)  
3. Strong Capitalisation: MCSL maintains a healthy capital profile, with a net worth of ₹670 crore, CAR of 22.04%, and gearing of 5.1x as on March 31, 2026, providing adequate capital to support future growth.

Muthoot Capital Key Risks

1. Credit costs: MCSL's profitability declined in FY2026 due to higher credit costs, with PAT reducing to ₹11.2 crore and RoMA to 0.3%.
2. Geographical Concentration: Despite diversification efforts, MCSL's portfolio remains concentrated in southern India, making it vulnerable to region-specific economic and operational disruptions.

Muthoot Capital Credit Rating

Muthoot Capital is rated CRISIL AA-/Stable for its long-term bank facilities, NCDs, subordinated debt and fixed deposits. Its commercial paper programme is rated CRISIL A1+. CRISIL upgraded the company's long-term rating from A+ (Positive) to AA-/Stable in February 2026, reflecting improved group credit strength and support.

In its latest rating action dated 1 October 2026, CRISIL assigned an AA-/Stable rating to a fresh ₹200 crore NCD issue and reaffirmed its existing long-term ratings and A1+ commercial paper rating.

Brickwork Ratings also assigned BWR AA/Stable to ₹300 crore of fixed deposits and reaffirmed BWR AA/Stable on ₹3,500 crore of bank loan facilities on 29 September 2026.

Note: Rating amounts are rated facility or programme limits, not necessarily actual outstanding borrowings. CRISIL and Brickwork have different rated bank-facility amounts. The ratings of individual instruments should be checked against the latest agency annexures before quoting an instrument-specific rating.