IIFL Finance Ltd (BOM:532636) Q2 2026 Earnings Call Highlights: Robust Profit Growth Amid Asset ...

This article first appeared on GuruFocus.

Profit After Tax: INR 418 crore, up 52% quarter-on-quarter. Pre-Provision Operating Profit: INR 1,033 crore, up 38% year-on-year and 23% quarter-on-quarter. Consolidated AUM: INR 90,122 crore, up 35% year-on-year and 7% quarter-on-quarter. Gold Loans AUM: INR 34,577 crore, reaching a historical high. Gross NPA: 2.1%, down 21 basis points quarter-on-quarter. Net NPA: 1.0%, down 11 basis points quarter-on-quarter. Assigned Loan Book: INR 18,607 crore, up 33% year-on-year and 24% quarter-on-quarter. Co-Lending Book: INR 11,848 crore, up 40% year-on-year. Liquidity: INR 8,174 crore. Net Gearing: 3.6 times. Annualized ROE: 11.9%. ROA: 2.2%. Basic Earnings Per Share: INR 8.9. Capital Adequacy: 28.2% consolidated, with NBFC at 18.6%, HDFC at 46.2%, and Samasta at 33.4%.

Warning! GuruFocus has detected 6 Warning Signs with BOM:532636. Is BOM:532636 fairly valued? Test your thesis with our free DCF calculator.

Release Date: October 31, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

IIFL Finance Ltd (BOM:532636) reported a 52% increase in profit after tax before noncontrolling interest, reaching INR418 crore, driven by strong growth in the gold finance business. The company's pre-provision operating profit rose by 38% year-over-year and 23% quarter-on-quarter, totaling INR1,033 crore. Consolidated Assets Under Management (AUM) grew by 35% year-over-year, reaching INR90,122 crore, with gold loans hitting a historical high of INR34,577 crore. The company's capital adequacy is strong at 28.2%, with liquidity above INR8,000 crore, positioning it well for sustainable growth. IIFL Finance Ltd (BOM:532636) received a positive rating outlook change from Fitch for its international rating, indicating improved financial stability.

Negative Points

The company faces challenges in its microfinance and MSME segments, with a cautious focus on recovery and collection due to asset quality concerns. Loan losses and provisions are expected to remain high, with guidance indicating a full-year provision of 2.8% to 3%, driven by discontinued micro LAP and unsecured digital loans. The asset quality in the unsecured business loans and LAP segments continues to deteriorate, raising concerns about bad origination and industry-wide challenges. The microfinance segment is still experiencing pain, with loan losses and provisions expected to be around 8% for the year. The company's standalone capital adequacy is being closely monitored, with potential concerns about maintaining target levels amid robust growth.

Story Continues

Q & A Highlights

Q: What is the outlook for gold loan momentum and affordable home loans over the next few quarters? A: Nirmal Jain, Managing Director, stated that gold loan momentum is strong, but it's difficult to provide specific growth guidance due to fluctuating gold prices. For home loans, particularly affordable ones, the company expects a 15% to 18% year-on-year growth, with new leadership expected to drive this growth.

Q: What is the current asset quality situation in the MSME and MFI segments, and what are the expectations for the future? A: Nirmal Jain explained that the MSME and MFI segments have faced challenges, with the MFI segment expecting loan losses and provisions around 8% for the year. The company is focusing on recovery and collection, and expects the situation to improve gradually.

Q: Can you explain the recent trends in asset quality for the LAP and unsecured business loans? A: Nirmal Jain noted that the asset quality deterioration in these segments is partly due to legacy issues and the impact of new regulatory guardrails. The company is reorienting these businesses and strengthening collections to improve asset quality.

Q: What are the expected changes in the home finance business with the new management? A: Girish Kousgi, the new MD and CEO, indicated that while no major changes in product policy are expected, there will be a focus on improving business rigor, collection efficiency, and team alignment to drive growth and efficiency.

Q: How does the company plan to manage capital adequacy given the growth targets? A: Nirmal Jain mentioned that the company is closely monitoring capital adequacy and may consider raising capital if necessary. The growth strategy includes leveraging co-lending and bank partnerships to manage capital requirements effectively.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

View Comments