Muthoot Capital Services Limited (MCSL), the non-banking financial company reported a sequential recovery in disbursements to ₹626 crore for the quarter ended December 31, 2025. While net interest income increased to ₹73.92 crore, net non-performing asset ratios rose to 3.64%.
The company reported profit after tax (PAT) of ₹8.43 crore for the third quarter of fiscal year 2026. This result represents a sequential increase from the ₹3.31 crore profit reported in the second quarter. The company’s assets under management (AUM) reached ₹3,399 crore, marking a 20% expansion compared to the same period last year. Operations showed a recovery in momentum as quarterly disbursements rose to ₹626 crore, up from ₹535 crore in the previous three-month period.
Key Development
The primary driver of the company’s portfolio expansion was a 20% year-on-year growth in retail and other loans, which reached ₹3,379.22 crore. To support this growth, MCSL utilized diverse funding channels, including a ₹150 crore green bond issuance backed by Axis Bank and GuarantCo. As of December 31, 2025, the company had secured ₹740 crore in total bank sanctions for the current fiscal year, with ₹375 crore remaining unutilized to provide operational liquidity.
Key Financial Updates
Total revenue from operations for the quarter stood at ₹155.08 crore, a slight increase from ₹153.54 crore in the second quarter. Interest income accounted for ₹148.30 crore of the total revenue. Total expenses for the period were ₹150.62 crore, driven by finance costs of ₹81.16 crore and operating expenses of ₹58.25 crore.
Profitability metrics showed improvement, with the return on assets (ROA) rising to 1.02% from 0.42% in the prior quarter, while the return on equity (ROE) increased to 5.10%. However, asset quality metrics were mixed. The gross non-performing asset (GNPA) ratio remained stable at 6.45%, but the net non-performing asset (NNPA) ratio rose to 3.64% from 3.07% in the previous quarter. The company maintained a capital adequacy ratio (CRAR) of 22.49%.
Business Outlook and Strategy
MCSL continues to maintain a broad geographical presence, operating across 23 states and 399 districts. The company’s borrowing strategy focuses on a diversified mix, with 44% of funding derived from NCDs and MLDs, 32% from term loans and working capital facilities, and 16% through securitization (PTC/DA).
While management observed that overall market conditions have been challenging for fundraising, they reported a steady flow of funds through various institutional modes. Strategically, the company has halted new disbursements under co-lending arrangements with specific partners, including Wheels EMI, Manba Finance, and Credit Wise Capital, while continuing to manage collections from the existing repayment schedules.
Sector and Macro Context The company remains primarily focused on the two-wheeler financing sector, which represents ₹2,997.44 crore of its regular (non-NPA) portfolio. MCSL’s credit profile is supported by a “Positive” outlook from CRISIL, which maintains an “A+” rating for its fixed deposits and an “A1+” rating for its commercial paper. The firm adheres to a 50% provision coverage ratio (PCR) for its Stage 3 assets to mitigate potential credit losses in its retail portfolio.