Muthoot Finance shares slump 7% on RBI proposal; here's what analysts say

Shares of Muthoot Finance fell sharply on Wednesday after the Reserve Bank of India (RBI) said it would soon come out with comprehensive guidelines on gold loans. The stock tanked 6.70 per cent to settle at Rs 2,140.30.

RBI Governor Sanjay Malhotra, in his monetary policy speech, said, "Loans against the collateral of gold jewellery and ornaments, commonly known as gold loans, are extended by regulated entities for both consumption and income-generation purposes. In order to harmonise guidelines across various types of regulated entities, to the extent possible, keeping in view their differential risk-bearing capabilities, we shall issue comprehensive regulations on prudential norms and conduct related aspects for such loans."

At present, loans taken against gold jewellery or ornaments — whether for daily consumption or to support small businesses — are governed by different rules depending on the lender. The Reserve Bank now aims to bring more consistency across all regulated entities (REs), such as banks and non-banking financial companies (NBFCs).

An analyst said the stock looked 'weak' on charts while another advised maintaining a cautious approach. 

Ravi Singh, SVP - Retail Research at Religare Broking, said, "Muthoot fell today due to RBI's proposal for tighter regulations affecting gold loan companies. The stock looked weak on daily charts and can slip towards Rs 1,950 level in the near term. On the higher end, a decisive breach above Rs 2,150 will be required for further upmove."

Osho Krishan, Senior Analyst – Technical & Derivative Research at Angel One, said, "For Muthoot, we should adopt a cautious approach, with the Rs 2,030-2,000 range acting as a crucial support zone."

As of December 2024, promoters held a 73.35 per cent stake in the gold loan NBFC.