Muthoot FinCorp diversifies funding to trim borrowing cost
IPO-bound Muthoot FinCorp has reduced its average cost of borrowing by 121 basis points to 9.11 per cent in FY26 from 10.32 per cent in FY25
Muthoot FinCorp, a Kerala-based non-banking financial company (NBFC) specializing in gold loans, has diversified its funding sources to reduce borrowing costs. The company has lowered its average cost of borrowing from 10.32 percent in FY25 to 9.11 percent in FY26, a 121 basis point reduction. This improvement is attributed to an increased share of overseas borrowings, commercial paper, and the listed debt market, which together now account for 18.12 percent of total borrowings.
Bank term loans still constitute a significant portion at 39.69 percent. The company's credit profile has also strengthened, with its CRISIL rating improving from A-/Stable to AA/Stable over the period. Despite a slight decrease in average loan yield from 22.47 percent to 21.38 percent in FY26, net interest margins have remained steady at 12.80 percent, demonstrating the company's ability to maintain profitability while optimizing its funding costs.
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