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Muthoot Finance shares plunged on Tuesday after the quarterly results of India's largest gold loan firm fell short of Street expectations, as higher costs dented its revenue. Muthoot Finance's standalone net profit for the April-June period fell 17 percent to Rs 802 crore compared with the corresponding period a year ago, according to a regulatory filing.

Its total income from operations came in at Rs 2,503.87 crore, down 8 percent on a year-on-year basis. Muthoot Finance's assets under management (AUM) increased 8 percent to Rs 56,689 crore for the three-month period.

The Muthoot Finance stock fell by as much as Rs 178.2 or 15 percent to Rs 1,009.8 apiece on BSE.

“The impact of the very low-interest rate teaser loans has resulted in lower yields during the quarter ended June 2022. The launching of teaser loans was a strategic move taken in October-December 2022, and it enabled us to attract a set of new high-value customers," said George Alexander Muthoot, Managing Director, Muthoot Finance.

"During the quarter, we focused on migrating such teaser loans to higher rate schemes, and we completed this exercise on June 30, 2022. Hence, the decline in loan assets by 2 percent,” he added.

Brokerage firm CLSA has reduced its target price to Rs 1,200 from Rs 1,225 for Muthoot Finance and continued with its 'underperform' rating. It said that Muthoot Finance's results significantly lagged estimates, and yields remained under pressure. The brokerage reduced its profit estimate for three years ending March 2025 by 8-15 percent.

First Published:Aug 16, 2022 10:31 AM IST