The Kerala-based non-banking financial company (NBFC) plans to raise up to ₹3,000 crore through a fresh issue of equity shares
IPO-bound Muthoot FinCorp has reduced its average cost of borrowing by 121 basis points to 9.11 per cent in FY26 from 10.32 per cent in FY25, supported by a diversified funding mix and increased access to overseas borrowings and debt capital markets.
The Kerala-based non-banking financial company (NBFC) plans to raise up to ₹3,000 crore through a fresh issue of equity shares, with the proceeds intended to strengthen its tier-I capital base and support future lending requirements.
The improvement in borrowing costs has been accompanied by a steady diversification of the company’s funding sources, with a greater contribution from overseas borrowings, commercial paper and the listed debt market.
Overseas borrowings accounted for 9.20 per cent of Muthoot FinCorp’s total borrowings in March 2026, compared with 1.65 per cent in March 2024. Commercial paper, which was introduced into its funding mix during this period, accounted for 8.92 per cent of total borrowings by March 2026.
Together, these two sources contributed 18.12 per cent to the company’s borrowing profile.
Bank term loans
Bank term loans continued to be an important component of its funding mix, accounting for 39.69 per cent of total borrowings in March 2026. The diversified liability profile has enabled the company to access multiple funding channels and optimise its overall cost of borrowing.
Muthoot FinCorp has also strengthened its credit profile over the years, with its CRISIL credit rating improving from A-/Stable in November 2016 to AA/Stable by July 2026. The improved rating reflects the company’s enhanced credit standing and supports its access to a wider pool of funding sources.
The benefit of lower borrowing costs is also reflected in the company’s interest margins. While its average yield on loans moderated to 21.38 per cent in FY26 from 22.47 per cent in FY25, its net interest margin remained steady at 12.80 per cent during the year. This demonstrates the company’s ability to maintain margin stability while optimising its cost of funds.
The company has further broadened its access to capital markets through non-convertible debentures (NCDs), with 67 listed issuances, providing an established avenue for raising funds from debt investors.
Published on November 12, 2026
