The vehicle financier's revenue rose 13% quarter-on-quarter, but profit fell 46% as higher expenses and a one-off gain last quarter distorted the picture.
Muthoot Capital Services reported a 55% yearly jump in net profit to ₹4.4 crore for Q2 FY27. However, profit halved sequentially from the previous quarter as rising expenses and a high base from a one-off gain squeezed margins.
For Muthoot Capital Services, the September quarter was a story of two conflicting trends. The vehicle financier's loan book grew robustly, but profitability took a sharp sequential hit, revealing the cost of its strategic pivot.
Revenue rose 12.8% from the June quarter to ₹175.4 crore, while net profit fell 45.8% to ₹4.4 crore. The net profit margin compressed by 270 basis points to 2.5%. The year-on-year picture is brighter, with profit up 55.5% from a low base of ₹2.83 crore in Q2 FY26.
Revenue & profit
Revenue (₹ Cr)
Profit (₹ Cr)
Net Profit Margin
Metric
CurrentQ2 FY27 (Sep '26)
PreviousQ1 FY27 (Jun '26)
Revenue (₹ Cr)
175.39
155.53
Profit (₹ Cr)
4.40
8.12
Net Profit Margin
2.5%
5.2%
Why the bottom line shrank
The steep quarterly profit drop stems from a sharp rise in total expenses, which grew 15.5% to ₹173 crore. A key driver was a ₹21.44 crore impairment expense flagged in the earnings call, according to AlphaStreet. This came alongside a 30.9% drop in other income, which had been inflated last quarter.
Management's strategic shift is also a factor. The company has stopped all new co-lending, focusing entirely on its own, higher-yielding book. While this boosts long-term margins, it requires heavy investment in new segments like used cars and commercial vehicles, which are currently loss-making.
The growth engine remains active
Beneath the profit squeeze, the core lending business is accelerating. Total disbursements hit ₹677 crore, up 26% quarter-on-quarter, as reported by AlphaStreet. Assets Under Management (AUM) crossed ₹3,500 crore, growing 25% year-on-year.
The two-wheeler segment remains the workhorse, but newer ventures are gaining traction. Commercial vehicle disbursements surged over 100% year-on-year, while used car financing also saw significant growth, according to management commentary on the call.
A pivot with a payoff timeline
The company's outlook hinges on its investment phase. Management, on the AlphaStreet call, expects the commercial vehicle business to break even by the end of this year and used cars by next year's first quarter. They are targeting an AUM of ₹4,200 crore by March 2027.
Funding costs are a watchpoint. While the overall borrowing cost eased to 9.52%, the broader NBFC sector faces margin pressure from rising rates. The company's recent AA rating upgrade aids its plan to grow low-cost public deposits pan-India.
Key Points
Net profit fell 46% quarter-on-quarter to ₹4.4 crore, pressured by a ₹21.44 crore impairment expense and lower other income.
Underlying business growth stayed strong with a 25% yearly rise in AUM to over ₹3,500 crore and quarterly disbursements of ₹677 crore.
The company is pivoting to 100% own-book lending, investing in used car and CV segments which are expected to break even over the next two quarters.
Management maintains an FY27 exit AUM target of ₹4,200 crore, supported by a pan-India deposit drive following a rating upgrade.
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Hexa Perspective
The quarter underscores a transition where growth in the core book is real but masked by the costs of building new businesses and cleaning the balance sheet. The 55% yearly profit jump is flattered by a very weak base in Q2 FY26, when profit was just ₹2.83 crore.
The path to sustained profitability now depends on two factors: the new segments reaching break-even as guided, and asset quality holding steady without further large impairments. If both hold, the current margin squeeze could be a temporary cost of building a more valuable, higher-yielding loan book.
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Frequently asked questions
What were Muthoot Capital's Q2 FY27 results?
For Q2 FY27 (September 2026), Muthoot Capital Services reported revenue of ₹175.39 crore and a net profit of ₹4.40 crore. Year-on-year, profit grew 55.5% from ₹2.83 crore, but it fell 45.8% sequentially from ₹8.12 crore in Q1 FY27.
Why did Muthoot Capital's Q2 profit drop 45.8% quarter-on-quarter?
Muthoot Capital's Q2 FY27 profit fell sharply due to a significant rise in total expenses, including a ₹21.44 crore impairment charge noted in the AlphaStreet earnings call. This was coupled with a 30.9% drop in other income compared to the previous quarter.
What was Muthoot Capital's AUM in Q2 FY27?
Muthoot Capital's Assets Under Management (AUM) stood at ₹3,530 crore at the end of Q2 FY27 (September 2026), as per the AlphaStreet transcript. This marks a 25% growth year-on-year and a 4.5% increase from the previous quarter.
How did Muthoot Capital's vehicle loan segments perform in Q2 FY27?
The vehicle finance business showed strong growth. According to the AlphaStreet call, commercial vehicle disbursements increased by over 100% year-on-year, and used car financing also saw significant growth, though from a small base. Two-wheeler loans remain the largest segment.
What caused the 270 bps contraction in Muthoot Capital's net profit margin?
The sequential margin contraction from 5.2% to 2.5% was primarily driven by a sharp increase in impairment expenses to ₹21.44 crore, as mentioned in the Q2 earnings call covered by AlphaStreet. Higher total expenses growing faster than revenue also pressured profitability.
What is Muthoot Capital's AUM target for FY27?
Management, on the AlphaStreet earnings call, stated they expect to exit FY27 with an AUM closer to the ₹4,200 crore range. This is after crossing the ₹3,500 crore milestone in September 2026.
What is the status of Muthoot Capital's asset quality in Q2 FY27?
According to reports from AlphaStreet and multibagg.ai, gross NPA (GNPA) for the overall book including off-book assets was 4.61% in Q2 FY27, an improvement from 6.46% a year ago. However, the own-book GNPA ratio increased sequentially to 4.81% from 3.94% in Q1.
What drove the 88.4% YoY surge in other income?
The large yearly jump in other income to ₹3.53 crore is partly attributed to an upfront interest component from a direct assignment (DA) transaction, as indicated in the AlphaStreet call. This suggests the surge may not be fully recurring in nature.
What are Muthoot Capital's expansion plans for its vehicle finance business?
Management's focus is on scaling the used car and commercial vehicle (CV) businesses. On the AlphaStreet call, the CEO stated the goal is for car and CV to occupy closer to 60% of the overall book over the next two years, moving beyond the core two-wheeler segment.
How did Muthoot Capital's Q2 FY27 results compare to analyst estimates?
The available research snippets do not provide specific consensus analyst estimates for profit or AUM. The reported profit of ₹4.4 crore represents a significant sequential decline, which likely contrasted with market expectations for steadier earnings.
What are major brokerages saying about Muthoot Capital stock after Q2 FY27 results?
The provided research does not include fresh brokerage ratings or targets following the Q2 results. One snippet from MarketsMojo.com dated November 6, 2026, rated the stock as a 'Sell' with a Mojo Score of 43/100, citing concerns over margin compression and reliance on non-operating income.
How did Muthoot Capital stock react to the Q2 FY27 results?
A MarketsMojo.com report noted the stock declined 2.74% to ₹198.85 following the results announcement, reflecting investor skepticism about the sustainability of earnings despite the yearly profit growth.
Muthoot Capital Services Q2 profit drop
Muthoot Capital Services' net profit for Q2 FY27 (September 2026) was ₹4.40 crore, a drop of 45.8% compared to the ₹8.12 crore profit in Q1 FY27. The decline was driven by higher impairment expenses and lower other income.
Muthoot Capital Services September quarter profit
Muthoot Capital Services reported a net profit of ₹4.40 crore for the September 2026 quarter (Q2 FY27). This represents a 55.5% increase from the ₹2.83 crore profit in the same quarter last year, but a 45.8% decrease from the June 2026 quarter.
Why did Muthoot Capital profits plunge despite higher sales?
Muthoot Capital's profit fell 46% quarter-on-quarter in Q2 FY27 despite a 13% sales increase because total expenses rose faster. A key factor was a sharp rise in impairment costs to ₹21.44 crore, as noted in the AlphaStreet earnings call, squeezing margins.
