Muthoot Finance Ltd shares extended their sharp decline for the second straight session on Friday, tumbling 8.22% to hit an intraday low of ₹1,964.35. The stock has now plunged 14.37% over just two trading sessions.

Market analysts are advising investors to tread cautiously, warning that the stock may see further downside.

“Investors should wait for clarity from the RBI. Muthoot has considerable exposure to gold, and with gold prices climbing, there’s now a significant gap between the exit and original loan-to-value (LTV) ratios. It’s best to wait for the final regulatory guidelines,” said Mayuresh Joshi, Head of Equity Research at William O’Neil India, in an interview with Business Today.

Ravi Singh, Senior Vice President of Retail Research at Religare Broking, echoed similar concerns. “The stock is under pressure due to the RBI’s proposed tightening of regulations for gold loan providers. Technically, the chart looks weak and the stock could slip to ₹1,950 in the near term. A strong recovery would require a decisive break above ₹2,150.”

Osho Krishan, Senior Analyst – Technical & Derivatives Research at Angel One, also advised a cautious stance on Muthoot for now.

The Reserve Bank of India (RBI) has announced plans to issue a unified set of guidelines for gold loans. RBI Governor Sanjay Malhotra stated, “Loans secured by gold jewellery or ornaments—commonly known as gold loans—are offered by various regulated entities for both consumption and business purposes. To harmonise norms across these entities, considering their varying risk capacities, we will soon release comprehensive regulations covering prudential norms and conduct-related matters.”

Currently, gold loan rules vary based on the type of lender. The RBI’s new guidelines aim to standardise these rules across all regulated entities, including both banks and non-banking financial companies (NBFCs).

As of December 2024, promoters held a 73.35% stake in Muthoot Finance.