Manappuram, Muthoot, and IIFL Finance shares rally up to 57% in six months; will the surge continue?

Even so, the bullion is set for a weekly gain of 7.6%, its biggest since early 2020. Silver also hit a new peak.

The speed of the upswing has been much faster than analysts had predicted and brings the total gains to nearly 100% since the current run started in early 2024.

In the domestic market, gold prices are at an all-time high ahead of Diwali and the wedding season, but it has not slowed down the consumer demand, though many of them seem to prefer "solid bullion" rather than jewellery, traders said on Thursday.

The price of the yellow metal stood at ₹1,28,395 per 10 grams on MCX during the day.

"Gold prices are increasing every day, and people are looking at this and coming in to invest. Demand for jewellery has slowed, but people are buying gold bars and coins. We are seeing a lot of demand for gold and silver bars in this festive season and ahead of the wedding season," said Vrishank Jain, owner of Umedlal Tilokchand Zaveri Jewellers in Mumbai's famous Zaveri Bazaar.

Given this meteoric jump in the yellow metal, shares of gold finance companies in India have also witnessed an impressive rally.

Data show that Muthoot Finance shares have jumped around 57% in the past six months on the NSE (including the early rates on Friday, October 17), while Manappuram Finance has rallied 25% during the period. IIFL Finance has surged around 50% in the past six months.

Why a rally in gold is positive for gold financiers

Gold financiers such as Manappuram, Muthoot Finance, and IIFL Finance primarily operate in the gold loan business — they lend money to customers against gold jewellery as collateral. As the value of gold increases, the same quantity of gold can fetch a higher loan amount.

This encourages more customers to take loans, especially during cash crunches, festivals, or business cycles.

Besides, rising gold prices often lead to increased demand for gold loans, as borrowers get better value for their collateral.

This means more disbursements and higher interest income for the financiers.

Additionally, analysts explain that the rise in gold prices provides a buffer for lenders — the loan-to-value ratio improves even for existing loans. This can enhance asset quality and reduce provisioning requirements for bad loans.

What lies ahead for gold financiers?

Experts note that currently there is a euphoria in precious metals, driven by multiple factors: shifts from treasuries into gold, increased household allocation to physical gold and silver, influencer-driven retail participation, and macro concerns around de-dollarisation and geopolitical uncertainty.

Muhurat trading often reflects broader sentiment, and this year, precious metals are capturing that narrative.

"From an equity market perspective, this rally is neutral to slightly positive. It signals risk-off sentiment, but it also highlights opportunities in gold/silver ETFs and related stocks. We view this as part of a balanced portfolio approach rather than a pure equity replacement," said Divam Sharma, Chief Executive Officer and Co-founder of Green Portfolio, a PMS, in an interview with Upstox News.

Hence, shares of the gold loan companies are expected to rally further in the coming days.

Gold NBFCs will continue to hog the limelight

Muthoot Finance outperformed in the April-June quarter (Q1) of 2025-26 (FY26), with its assets under management (AUM) growing 10% quarter-on-quarter (Q-o-Q) and 42% year-on-year (Y-o-Y), an improvement of 88 basis points (bps) Q-o-Q in net interest margin (NIM), and a fall in credit cost.

Gold AUM rose 40% Y-o-Y and 10% Q-o-Q.

The company recorded recoveries of ₹350 crore, including ₹100 crore from an asset reconstruction company (ARC), resulting in a 100-bp Q-o-Q yield increase.

Gold loan growth was strong even for Muthoot Money, a wholly owned subsidiary.

Muthoot Money’s AUM rose 202% Y-o-Y, while the non-gold (vehicle finance) portfolio reduced. Non-gold AUM at Muthoot Money was ₹150 crore, around 3% of its AUM.

How shares were performing in early trade

Muthoot Finance shares were trading around 2% higher at ₹3,330.10 apiece on the NSE, while Manappuram Finance was up 0.73% at ₹288.90. IIFL Finance was trading flat at ₹499.25.