The gold financing company said its profit rose 14.3% to 9.91 billion rupees ($119.00 million) for the quarter ended Sept 30, missing analysts' expectation of 10.41 billion rupees, according to LSEG data.
Muthoot's profit miss comes amid a high cost of funds as the Indian central bank kept lending rate steady at 6.50% in its fourth straight policy meeting in October. It has raised rates by 250 basis points since May 2022 in a bid to cool surging prices.
Analysts had estimated bank borrowing costs for NBFCs to reprice upwards in first half of FY24.
Kerala-based company's finance costs rose by more than 28%, taking total expenses nearly 30% higher to 17.43 billion rupees.
The company missed estimates in the June quarter as well, despite posting its first quarterly profit growth in six.
Standalone loan assets under management, however, grew 21% to 690.02 billion rupees for the half-year ended Sept. 30 on steady demand for loans.
Gold prices hit record high earlier this year and though there was some correction, prices were up more than 20% year-on-year in the quarter. Higher gold prices is a positive for gold financiers, as more customers pledge gold as collateral aiding loan growth.
Muthoot's interest income rose nearly 22% to 30.15 billion rupees.
"Our gold loan assets under management demonstrated strong growth, led by strong demand trends in both urban and semi-urban markets," Managing Director George Alexander Muthoot said in a statement.
Muthoot's main rival Manappuram Finance is set to report second-quarter results on Nov. 13.
Shares of Muthoot Finance ended 0.7% lower ahead of the results.
($1 = 83.2770 Indian rupees)
(Reporting by Nishit Navin in Bengaluru; Editing by Janane Venkatraman)
