Muthoot Finance has just made history. On June 9, its shares surged 4.2% to hit an all-time high of ₹2,548 apiece, pushing its market capitalisation beyond ₹1 lakh crore for the very first time. With this, Muthoot Finance has become the first-ever Kerala-based company to cross this landmark valuation on the Indian stock market.
The rally, which continued for the seventh straight session, came on the back of the Reserve Bank of India’s (RBI) newly issued gold loan guidelines, which introduced significantly relaxed norms for lenders dealing in gold-backed credit.
The trigger for this upswing came on June 7, when the RBI published its final framework for gold loans. The loan-to-value (LTV) cap for loans under ₹2.5 lakh has been raised to 85%, up from the previous 75%. This gives lenders the green light to offer higher amounts against the same quantity of gold.
More significantly, the RBI has decided not to impose any LTV cap on income-generating gold loans—meaning small businesses and traders could gain access to more flexible financing. Also gone is the earlier proposal that would have required lenders to set aside provisions if the LTV ratio was breached. Instead, banks and NBFCs now only need to define how they’ll handle such breaches in their credit policies.
Earlier in April, the RBI’s draft rules had suggested tighter controls on gold loan disbursals and more rigorous monitoring. These were seen as potentially restrictive, especially for lower-income borrowers who often rely on gold as collateral. After public feedback and a nudge from the Union Finance Ministry, the final rules have taken a softer stance.
Analysts say the revised norms are more balanced than the draft and provide lenders like Muthoot with better operating flexibility. However, they also point out that the RBI hasn’t loosened all strings—larger ticket loans over ₹2.5 lakh will still need detailed credit assessments.
Brokerage firm Kotak Institutional Equities believes the new rules could boost Muthoot’s short-term loan growth and profit margins. The company had seen its effective LTV ratio drop by 600 basis points in Q4FY25, thanks to rising gold prices. With more breathing room now, Muthoot may have the space to lend more aggressively.
Data from Kotak shows that a large chunk of Muthoot’s loan book falls within the ₹1 lakh to ₹3 lakh bracket—right in the sweet spot for the relaxed LTV cap. Around 28% of its loans are below ₹1 lakh, 35% between ₹1–3 lakh, and 38% above ₹3 lakh.
Fertilisers and Chemicals Travancore (FACT) ranks as the second most valuable listed company from Kerala, with a market capitalisation of ₹67,845 crore. It is followed by Cochin Shipyard at ₹60,549 crore, Kalyan Jewellers India at ₹56,879 crore, and Federal Bank at ₹52,257 crore.
