IIFL - IIFL FINANCE LIMITED Share Price

The management of IIFL Finance Limited provided a constructive outlook for the company, emphasizing on a strong economic environment. The Indian economy shows resilience with steady GDP growth, moderating inflation, and significant credit demand from retail and MSME sectors. IIFL Finance has repositioned itself towards secured lending, focusing on gold loans and mortgages, projecting an AUM growth of approximately 20% to 25% for the gold loan segment if prices stabilize.

With a loan AUM crossing INR 1 lakh crore, IIFL Finance reported a consolidated profit after tax of INR 623 crores for Q4 FY26, an increase of 24% quarter-on-quarter. The company foresaw a continuous upward trend in secured lending and asset quality improvement. Notably, the gross NPA stood at around 1.5%, with a net NPA of 0.7%, indicating effective risk management.

On co-lending growth, the company targets expanding this segment to 40% to 45% of its overall AUM, supported by a well-formulated strategy. Credit costs are projected to decline from 2.7%-3% to around 1.5%-1.7% for FY27, leading to improved ROA from the current 2.4% to an expected 3%-3.5%.

Key strategic initiatives include enhancing productivity through AI, focusing on affordable housing finance, and cautiously growing the microfinance segment. Management reiterated their confidence in navigating tax assessments without expecting any material adverse outcomes, positioning the company for sustainable, capital-efficient growth. Overall, the agenda for FY27 reflects robust planning, calculated risk, and a commitment to solidifying IIFL Finance's market position.

1. Question: What's happening with the special audit or the income tax special audit?
Answer: The special audit has been completed and submitted to tax authorities. We expect assessment orders for our company in a few days, similar to group companies that have already received theirs.

2. Question: What impact do you expect from the tax assessment, especially given reports of potential liabilities?
Answer: I cannot comment on speculative reports. However, I expect a normal tax outlook this year. We plan to appeal any assessment orders if they demand additional tax, as we believe our tax position is solid.

3. Question: What AUM growth do you anticipate for your gold finance business if prices stabilize?
Answer: If gold prices remain stable, we expect around 20% to 25% AUM growth for the upcoming year.

4. Question: Are there any updates on the demerger of IIFL Home Finance?
Answer: A demerger remains an option, especially since we have a private equity investor looking to exit. However, any decision will be at the Board level, and while I can't provide a timeline, it's on the table.

5. Question: What credit cost and ROA guidance do you have for FY '27 given your AUM growth expectations?
Answer: For FY '27, our credit cost is expected to be around 1.5% to 1.7%. We anticipate the ROA could grow to 3% to 3.5% depending on growth and credit cost improvements.

6. Question: Can you elaborate on your growth strategy regarding gold loans under the new regulations?
Answer: We comply with the new guidelines, especially for loans over INR 2.5 lakh, requiring detailed credit assessments. This offers us an opportunity to penetrate underserved markets more effectively.

7. Question: How do you see your home finance and Samasta Microfinance segments evolving?
Answer: We aim for an 18% to 20% AUM growth in home finance and will focus on higher-yield affordable loans. Samasta will cautiously grow its microfinance book, targeting 20% growth.

8. Question: What is your view on maintaining a low leverage ratio while aiming for growth?
Answer: We aim to maintain a leverage ratio ideally below 4.5x. Growing our off-book and co-lending strategies will help manage our capital efficiently as we pursue growth.

9. Question: How do you plan to respond to competition in the mortgage space, especially with new entrants?
Answer: The affordable housing market is large, and while competition is intensifying, we focus on customer retention through interest subsidies and a clear strategy. We believe we can grow our book effectively.

10. Question: What roadmap do you have for improving your standalone credit rating?
Answer: Improving profitability, maintaining strong asset quality, and possibly raising capital will be crucial. We believe an upgrade could reduce our borrowing costs significantly by 100-120 basis points.