Press Release September 21, 2026 MUTHOOT MERCANTILE LIMITED Rating Assigned and Reaffirmed

Product	Quantum (Rs. Cr) (SEBI)	Quantum (Rs. Cr) (Other FSR)	Long Term Rating	Short Term Rating	Regulated By
Bank Loan Ratings	0.00	400.00	ACUITE A- | Stable | Assigned	-	RBI
Non Convertible Debentures (NCD)	300.00	0.00	ACUITE A- | Stable | Assigned	-	SEBI
Non Convertible Debentures (NCD)	100.00	0.00	ACUITE A- | Stable | Reaffirmed	-	SEBI
Commercial Paper (CP)	0.00	50.00	-	ACUITE A1 | Assigned	RBI
Total Outstanding	400.00	450.00	-	-	-
Total Withdrawn	0.00	0.00	-	-	-

Note:- For activities or ratings of instruments falling under the purview of Financial Sector Regulators other than SEBI, the grievance / dispute redressal mechanisms and investor protection mechanisms provided by SEBI shall not be available.

Rating Rationale

­Acuite has reaffirmed its the long-term rating of 'ACUITE A-'  (read as ACUITE A Minus) on the Rs.100 Cr. of proposed Non-Convertible Debentures of Muthoot Mercantile Limited. The Outlook is 'Stable'. ­Acuite has assigned the long-term rating of 'ACUITE A-'  (read as ACUITE A Minus) on the Rs.300 Cr. of proposed Non-Convertible Debentures of Muthoot Mercantile Limited. The Outlook is 'Stable'. ­Acuite has assigned the long-term rating of 'ACUITE A-'  (read as ACUITE A Minus) on the Rs.400 Cr. of proposed Bank Loan facility of Muthoot Mercantile Limited. The Outlook is 'Stable'. ­Acuite has assigned the short-term rating of 'ACUITE A1'  (read as ACUITE A one) on the Rs.50 Cr. of proposed Commercial Paper of Muthoot Mercantile Limited.  Rationale for the Rating The rating takes into account the healthy and continuous improvement in the earning profile and healthy growth in the operational performance of the company. MML has reported a PAT of Rs. 53.35 Cr. during FY26 as compared to Rs. 28.09 Cr. during FY25. The improvement in earning profile is on the continuous growth in disbursements supported by the significant increase in the number of branches and focused business drives conducted by the company. The company’s AUM has increased to Rs. 1305.00 Cr. as on March 31, 2026 as compared to Rs. 890.50 Cr. as on March 31, 2025. The company’s disbursements have gained traction as reflected by FY26 disbursements of Rs. 4140.31 Cr. as against Rs. 2065.31 Cr. in FY25. The Capital Adequacy Ratio (CAR) stood adequate at 24.89 percent as on March 31, 2026 as against 25.36 percent as on March 31, 2025. These strengths are partially offset by relatively higher leverage the rating is also constrained due to highly competitive business of lending against gold. Acuité believes, going forward, the ability of the company to maintain comfortable capitalization levels with regular equity infusion, healthy resource raising ability and further augment its scale of operations while maintaining healthy profitability & asset quality will be a key rating monitorable.

About the company

­Muthoot Mercantile Limited based in Thrippunithura, a leading NBFC is the flagship company of Muthoot Ninan Group and it was incorporated in 1997. Muthoot Ninan Group was started by its founding father, late M. Ninan Muthoot, in the year 1939. The main business of the Company is lending against the security of Gold, Investments, Health Insurance, Forex Services and Money Transfer. The Company is promoted by Shri. M. Mathew and his son, Shri. Richi Mathew. Shri. M. Mathew is the only son of late M. Ninan Muthoot. The company originates, provides, services personal loans and loans against gold jewellery. Mr. Richi Mathew, Mr. Mathew Mathaininan, Mr. Ammini Mathew, Mr. Asha Richi Mathew, Mr. Dillark Justin, Mr. Pathrose Ladislas, Mr. Antony Robert John are directors of the company.

Unsupported Rating

­Not Applicable

Analytical Approach

­­Acuité has considered standalone business and financial risk profile of MML to arrive at the rating.

Key Rating Drivers

Strength

­Expansion across geographic location & Growth in loan book MML has a significant presence in the gold loan segment and has evidently shown significant growth during FY25-FY26, with the loan book growing around 46.55% yoy to Rs. 1305.00 Cr in FY26 which is backed by the addition of new branches. MML added more than 26 new branches over FY25-FY26, taking the total branch count to 325 as of March 2026. Until 2019, the company had operations only in Kerala and Tamil Nadu. However, it has now diversified its geographical presence to Madhya Pradesh, Punjab, Maharashtra, Orissa, New Delhi, Uttar Pradesh, Rajasthan and Haryana. MML will also be looking for co-lending opportunities to increase its portfolio in the near term and expand its presence pan-India. Reasonable Profitability Supporting Growth MML’s net interest margin increased slightly to 12.48%, according to the financials for FY26 (FY25: 11.32% ; FY24: 12.48%), the cost of borrowing has been constantly growing year on year However this rising cost has been managed successfully. The company’s profitability has remained comfortable as reflected during fiscal 2026, the company reported profit after tax (PAT) of Rs 53.35 crore and RoA of 4.47% as against a PAT of Rs 28.09 crore and RoA of 3.16% during fiscal 2025. The company’s profitability is expected to remain stable over the medium term as it focuses on leveraging its existing branch network. The company is focused on the gold loan segment; ultimate credit losses are low given the option to auction the jewellery and recover due. MML’s operating expenses is going to maintain its current trajectory as MML is undergoing a rapid growth phase in terms of the number of branches Pan-India. This would further improve its assets under management which will drive its overall profitability over the medium term with capital infusion for further growth. Stable Asset Quality and Adequate Capitalization Despite the more severe interruptions to the larger market during the COVID-19 phase, the gold loan segment remained robust. One of the safest asset classes, gold loans, demonstrated their resilience, which translates to resilient asset quality. The gross NPA declined to 0.27% in FY26 (from 1.53% in FY25). The final credit loss is limited despite the borrower class's vulnerability since the collateral is liquid and the loan-to-value (LTV) is limited at 75% per regulatory criteria at the time of disbursement. MML's credit cost has always been low and less variable over the cycle because it is in the gold lending business, which has better operating profit buffers. The LTV of MML's main book in March 2026 is between 60% and 75%, which provides enough leeway should the business decide to use auctions to recoup its debt. The company maintains sufficient LTV buffers, and prompt auctions and recoveries are essential for MML to keep consistent asset quality. MML tracks LTV based on daily gold prices. The threshold LTV, which may cause the business to look for more collateral or start the auction procedure, is determined by taking the current LTV (calculated based on the day's gold price) as the starting point and adding margin to account for the impact of fluctuations in gold prices on realisations until the auction process is finished. In order to mitigate the risk associated with gold price fluctuation over the loan tenor, MML seeks additional collateral or initiates the auction process once the exposure approaches the threshold LTV, contingent on the borrower's answer. This happens regardless of the loan term's completion. MML is wholly owned by the chairman and his family, with a tangible net worth of Rs. 246.18 Cr. as on 31 March 2026. The company’s overall capital adequacy stood at 24.89% as on 31 March 2026 (FY25: 25.36%, FY24: 29.82%, FY23: 37.93%), supported by accruals and the company’s ability to raise subordinate debt from retail investors. Acuite believes that MML’s capitalisation levels are adequate to support the management’s near-term growth strategy.

Weakness

­Moderate Leverage Position MML is engaged in loans against golds which are secured for a period of 9 months on average. The company's networth stood at Rs. 246.18 Cr. and total debt Rs. 1136.34 Cr. as on March 26. MML's gearing stood at 4.62 times in FY26 and 4.08 times in FY25. There was a considerable jump from FY24 as the gearing was 3.75 times. To support the growth momentum of MML would require further debt and considering the already leveraged capital structure the promoters may be required to infuse additional equity to support any future business growth. Funding Profile remains Concentrated As on March 2026, bank borrowings & term loans from banks constitutes ~ 25% of the funding for MML, with debentures accounting for ~37% and subordinated debentures for ~15%. Gearing, for the corporation as on March 2026 was 4.62 times. Retail investors, primarily from Tamil Nadu and Kerala, are the ones funding the debentures and subordinate loans. The funding profile of MML is still concentrated, with an increase in debentures across the lenders and a decrease in bank loans as a percentage of total funding. However, Acuite thinks that subordinated debt still accounts some portion of the finance. Consequently, one of the main factors influencing the ranking would be more funding profile diversity.

ESG Factors Relevant for Rating

­Muthoot Mercantile Limited is a non-banking finance company (NBFC) Some of the material governance issues for the financial services sector are policies and practices with regard to business ethics, board diversity and independence, compensation structure for board and KMPs, role of the audit committee and shareholders’ rights. On the social aspect, some of the critical issues for the sector are the contributions to financial inclusion and community development, responsible financing including environmental friendly projects and policies around data privacy. The industry, by nature has a low exposure to environmental risks. The company has a well-structured board. In accordance with the guidelines issued by RBI, the entity has constituted a Risk Management Committee that is responsible for identification, evaluation, and mitigation of operational, strategic, and external environment risks. MML also provides fee-based services by way of money transfer facilities.

Rating Sensitivity

Potential triggers (individual or collective) for an upward rating action:

­ Significant growth in AUM and disbursements. Significant improvements in profitability metrics: ROAA exceeding 6 percent

Potential triggers (individual or collective) for a downward rating action:

­ Deterioration in asset quality metrics, collection efficiency Debt to equity more than 7 times

Liquidity Position

Adequate

The company’s liquidity position remains adequate, supported by its comfortable capitalization profile and granular liability structure. As per the ALM statement dated March 31, 2026, the company is expected to have total serviceable debt obligations of Rs.431.56 crore during FY2026-27 against expected inflows of Rs.1,340.02 crore over the corresponding period, resulting in a cumulative positive mismatch of Rs.908.46 crore up to one year. Further, the company reported total borrowings of Rs.1,136.34 crore and a comfortable net worth of Rs.246.18 crore as on March 31, 2026, with a healthy CRAR of 24.89%. The liquidity profile is also supported by the predominance of short-tenure gold loans in the company’s portfolio, which facilitates regular cash flow generation. This, together with access to relatively longer-tenure borrowings, provides an adequate cushion to meet its near-term repayment obligations.

Outlook : Stable

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Other Factors affecting Rating

­None

Key Financials - Standalone / Originator

Particulars Unit FY26 (Actual) FY25 (Actual) Total Assets Rs Cr 1397.67 988.34 Total Income Rs Cr 141.26 93.45 PAT Rs Cr 53.35 28.09 Net Worth Rs Cr 246.18 192.29 Return on Average Assets (RoAA) (%) 4.47 3.16 Return on Average Net worth (RoNW) (%) 24.33 15.74 Debt/Equity Times 4.62 4.08 Gross NPA (%) 0.27 1.53 Net NPA (%) 0.17 1.30 *Total income equals to Net Interest Income plus other income

Status of non-cooperation with previous CRA (if applicable):

­Not Applicable

Any other information

­None

Applicable Criteria

• Application Of Financial Ratios And Adjustments: https://www.acuite.in/view-rating-criteria-53.htm • Commercial Paper: https://www.acuite.in/view-rating-criteria-54.htm • Default Recognition: https://www.acuite.in/view-rating-criteria-52.htm • Non-Banking Financing Entities: https://www.acuite.in/view-rating-criteria-44.htm

Note on complexity levels of the rated instrument

­In order to inform the investors about complexity of instruments, Acuité has categorized such instruments in three levels: Simple, Complex and Highly Complex. Acuite’s categorisation of the instruments across the three categories is based on factors like variability of the returns to the investors, uncertainty in cash flow patterns, number of counterparties and general understanding of the instrument by the market. It has to be understood that complexity is different from credit risk and even an instrument categorized as 'Simple' can carry high levels of risk. For more details, please refer Rating Criteria “Complexity Level Of Financial Instruments” on www.acuite.in.

Rating History

Date Name of Instruments/Facilities Term Amount (Rs. Cr) Rating/Outlook 31 Aug 2026 Proposed Non Convertible Debentures Long Term 100.00 ACUITE A- | Stable (Assigned)

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Contacts

Mohit Jain Chief Analytical Officer - Rating Operations Eshan Jain Senior Manager - Rating Operations	Contact details exclusively for investors and lenders Mob: +91 8591310146 Email ID: analyticalsupport@acuite.in

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