Comfortable capitalisation, supported by demonstrated ability to raise capital and an asset light business model

The group has demonstrated its ability to raise capital from long term marquee investors, such as Fairfax and the CDC group in the past. IIFL Home has also raised Rs 2,200 crore as primary equity from ADIA in the second quarter of fiscal 2023. Consequently, consolidated networth improved to Rs 12,056 crore as on March 31, 2024 Rs 10,202 crore as on March 31, 2023 and adjusted gearing to 3.9 times as against 3.9 times. Further, IIFL Finance raised Rs 1,272 crore via rights issue in May 2024 and consolidated networth stood at Rs 13,701 crore as on June 30, 2024 with adjusted gearing stood at 3.1 times as on June 30, 2024. Networth coverage for net non performing assets NPAs was comfortable at 28 times as on June 30, 2024. Given the capital infusion and the asset light business model, capitalisation should remain comfortable for the projected scale of operations over the medium term.

Established track record of operations and extensive branch network ability to revive market share in the gold loan business will remain a monitorable

Consolidated AUM witnessed a de growth of 12% as on June 30, 2024 and stood at Rs 69610 crore as against Rs 78,960 crore as on March 31, 2024, driven by rundown in gold loan portfolio along with momentary slowdown in microfinance portfolio. Consolidated AUM stood at Rs 64,638 crore as on March 31, 2023, and Rs 51,210 crore, a year earlier. Majority of the book has been deployed in retail asset classes. Two lending subsidiaries, IIFL Home and IIFL Samasta, are engaged in mortgage finance and microfinance, respectively. In the affordable housing space, the group extends loans of average ticket size of Rs 20 lakhs and within this sub segment, it is a prominent player. Retail loans ticket size less than Rs 1 crore accounted for 98% of the consolidated AUM as on June 30, 2024, making the portfolio highly granular.

Sustained profitability metrics supported by stable asset quality

Consolidated RoA and RoMA were 3.4% and 2.3%, respectively, in fiscal 2024 and 3.3% and 2.3%, respectively, for fiscal 2023. On an absolute basis, consolidated net profit was Rs 1,974 crore in the fiscal 2024 and Rs 1,608 crore in fiscal 2023. Earnings were supported by lower credit cost provisions and write offs average managed assets. Credit cost was marginally better at 1.1% during fiscal 2024 vis a vis 1.2% in fiscal 2023 1.6% in fiscal 2022. Consolidated RoA and RoMA were 2.2% and 1.6% respectively, with net profit stood at Rs 338 crore in first quarter of fiscal 2025. Earnings were impacted due to lower net interest margins NIMs and increase in operating expenses in the quarter.