A Study on Analysis of Profitability Ratios at Muthoot Finance

Abstract

Profitability ratio analysis is an essential instrument for evaluating the operational efficiency, return generation capacity, and long-term financial sustainability of non-banking financial companies (NBFCs). Muthoot Finance Limited, India’s largest gold loan NBFC with assets under management exceeding ₹7.1 lakh crore (FY 2023–24), occupies a unique position in India’s credit landscape by providing collateralised lending to underserved segments of the population. This study analyses Muthoot Finance’s profitability ratios over the five-year period FY 2019–20 to FY 2023–24, examining Net Profit Margin, Return on Assets (ROA), Return on Equity (ROE), Return on Capital Employed (ROCE), Earnings Per Share (EPS), and Interest Coverage Ratio (ICR). Secondary data sourced from Muthoot Finance annual reports, NSE filings, and CRISIL research was analysed through trend analysis and ratio benchmarking. Findings confirm Muthoot Finance’s consistent profitability despite gold price volatility, regulatory changes, and competitive intensity. ROE averaged 24.8% over the study period, Net Profit Margin sustained above 28%, and EPS grew at a five-year CAGR of 14.2%. Suggestions include portfolio diversification beyond gold loans, digital lending channel investment, and capital structure optimisation to sustain profitability across economic cycles.