Record gold price may not bring back sheen in Muthoot, Manappuram: Analysts

Analysts believe the continued aggression of banks and fintechs would make gold loan NBFCs pivot their business models to lower spreads and margin

Despite gold prices hitting record highs, analysts aren't gung-ho about the outlook for gold financiers, Muthoot Finance and Manappuram Finance. This, they said, was due to intense competition from banks, coupled with stagnating loan book and likely pressure on margins.

"The going seems to be tough for gold financiers to achieve gold asset under management (AUM) growth, amid intense competition and pricing pressure. Moreover, microfinance, commercial vehicles, home loan, MSME/personal loans are performing better than gold loans," said analysts at Prabhudas Lilladher.

Higher gold prices mean customers seeking loans would get more money on their gold holdings. The yellow metal