Muthoot Finance shares fell 14.4% on Monday, erasing significant value despite the lender reporting a 25% rise in quarterly profit for the June quarter.
The sharp decline reflects a market shift where investors are prioritizing margin sustainability over top-line growth in India's gold loan sector.
Brokerages flagged concerns over margin compression and intensifying competitive challenges as the primary drivers of the sell-off.
While the company reported healthy loan growth, the market reaction suggests that traders are pricing in a tougher operating environment for non-banking financial companies (NBFCs) focused on gold lending.
The move extends a broader wave of selling pressure across India's gold loan sector.
Shares of India’s largest gold loan NBFCs, including Muthoot Finance and Manappuram Finance, had already faced renewed selling pressure earlier in the week, declining by as much as 3.5% in trade.