Although gold has traditionally served as a passive savings medium for Indian households, the current price surge is transforming this asset into an increasingly significant source of liquidity through gold-backed loans.
According to Jefferies' analysis, Manappuram Finance has become the preferred broker choice for investing in the growing monetization of gold within formal credit channels. This interest is driven by the steady rise in gold prices over the past year, which increased by 35 percent to reach $4600 per ounce, boosting household wealth and creating conditions for further gold-backed borrowing.
In a recent note prepared jointly with Jefferies head Mahesh Nandurkar, Abhinav Sinha, and Priyank Shah, the broker also noted that other potential beneficiaries of rising gold prices include Titan, Kalyan Jewellers, Multi Commodity Exchange of India (MCX), as well as gold lenders such as IIFL Finance and Muthoot.
The preference for gold-related stocks is linked to the sharp increase in the value of gold held in Indian families. For over a year, gold prices have remained above $4000 per ounce, and according to Jefferies, households hold approximately 25,000 tons of this metal.
Jefferies reported that the value of these reserves was approximately $3.9 trillion as of March 2026, representing an increase of nearly $1.9 trillion over the last two years. This amount significantly exceeds the $111 billion of gold held by the Reserve Bank of India.
The broker believes that the current gold price cycle is transforming this asset into a source of liquidity through gold-backed loans. According to Jefferies' calculations, a 10 percent increase in gold prices could create additional household wealth of about $400 billion and support another $20-25 billion in gold loans. Together, these factors could provide an additional boost to GDP and spending of 80-100 basis points.
Gold Loans
According to the note, the volume of gold loans as of March 2026 was estimated at approximately $197 billion, representing an increase of almost 73 percent in dollar terms over the last two years. Currently, they account for about 7 percent of the total lending volume of banks and Non-Banking Financial Companies (NBFCs).
Nandurkar, Sinha, and Shah noted that the monetization of household gold through bank and NBFC lending rose from less than 4 percent as of March 2026 to approximately 5.1 percent. However, it is estimated that only about 15 percent of household gold reserves are monetized, assuming a Loan-to-Value (LTV) ratio of 65 percent and accounting for additional borrowing through informal channels.
The authors also pointed out that the share of gold loans in the total household gold reserves decreased by approximately 80 basis points compared to the level in March 2024, as lending failed to keep pace with the sharp rise in gold prices.
Jefferies forecasts that if this trend continues over the next two years, it could lead to an increase in the share of monetized gold reserves by 8-10 percentage points, equivalent to an additional $15-20 billion in annual gold loans.
Model Portfolio
Against this backdrop, Jefferies added Manappuram as a preferred stock for participation in the gold monetization theme, supported by moderate reductions in several lending institutions. Furthermore, Jindal Stainless was replaced by Hindustan Zinc in the Indian model portfolio to gain exposure to the silver theme.
Jefferies also reported that among other additions, Meesho was included as a bet on mass discretionary consumption, and Navin Fluorine was added due to growth opportunities in CDMO, cooling products, specialty chemicals, and advanced materials. These companies are expected to deliver a Compound Annual Growth Rate (CAGR) of earnings per share (EPS) of 23 percent during the fiscal year 2026-2029. Meanwhile, Ambuja was excluded from the portfolio.