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Muthoot Finance, Manappuram shares rally nearly 5%; what is behind the stock surge?

Swati Verma
By Swati Verma

3 min read | Updated on August 20, 2026, 13:13 IST

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SUMMARY

Gold prices surged more than 3% in the international market on Wednesday, hitting their highest level in over two-and-a-half months after a surprise liquidity support announcement by the US Treasury weakened bond yields and the US dollar.

Stock list

MUTHOOTFIN
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MANAPPURAM
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Gold loan stocks, August 20, 2026

The rise in stocks of Manappuram Finance and Muthoot Finance could be attributed to a sharp rise in gold prices. Image: Unsplash

Shares of gold loan financiers Manappuram Finance and Muthoot Finance were trading with impressive gains on Thursday, August 20, amid a broad-based rally in the market.

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Shares of Muthoot Finance gained as much as 4.85% to ₹2,997.80 apiece on the NSE, while Manappuram Finance surged up to 3.41% to ₹351.60.

The rise in stocks of Manappuram Finance and Muthoot Finance could be attributed to a sharp rise in gold prices.

Gold prices surged more than 3% in the international market on Wednesday, hitting their highest level in over two-and-a-half months after a surprise liquidity support announcement by the US Treasury weakened bond yields and the US dollar.

Spot gold jumped 3.6% to $4,487.91 per ounce, after touching an intraday high of $4,499.20, its strongest level since June 4. US gold futures settled 2.8% higher at $4,545.30.

However, on Thursday, the yellow metal retreated from the mentioned peak as market participants booked profits.

Why are higher gold prices positive for gold financiers?

The stocks of Muthoot and Manappuram surged as rising bullion prices increase the value of pledged collateral, support larger loan disbursals, and improve the credit profile of gold loan lenders.

Higher collateral value = bigger loans: If a customer pledges the same 100 grams of gold, its value is now higher. That allows Muthoot and Manappuram to disburse a larger loan without taking additional risk.
Loan growth accelerates: Record or elevated gold prices typically encourage borrowers to monetise their jewellery instead of selling it, driving higher gold loan demand and assets under management.
Lower credit risk: Rising gold prices improve the value of the jewellery pledged as collateral, reducing the loan-to-value (LTV) ratio on existing loans. This gives lenders like Muthoot Finance and Manappuram Finance a larger safety cushion, as the pledged gold is worth significantly more than the outstanding loan amount.

If a borrower defaults, the companies are more likely to recover the full loan through auctioning the gold, thereby lowering credit risk.

What is LTV ratio?

The loan-to-value (LTV) ratio is the percentage of a gold item's value that a lender is willing to give as a loan. It measures the loan amount relative to the value of the pledged collateral.

Better investor sentiment: Markets often treat rising gold prices as a tailwind for gold financiers because stronger loan growth and healthier collateral values can support earnings.
Disclaimer: This article is purely for informational purposes and should not be considered investment advice from Upstox. Please consult with a financial adviser before making any investment decisions.

About The Author

Swati Verma
Swati Verma is a business journalist with 12 years of experience. She writes on equities, corporate earnings, sectoral trends, and industry outlook, among others. At Upstox, she leads financial markets coverage.

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