Company Update : IIFL Finance Ltd By Motilal Oswal Financial Services Ltd
Gold AUM up 40% QoQ; lower other income leads to earnings miss
Calc. NIMs declined ~10bp QoQ; GNPA improves ~20bp sequentially
* IIFL Finance’s (IIFL) 4QFY25 NII was down 20% YoY but up ~6% QoQ at ~INR13.1b (~6% beat). Other income stood at ~INR810m (PQ: INR1.1b).
* Net total income declined ~10% YoY to ~INR14b. Opex declined ~4% YoY to INR7.4b (in line), with the cost-income ratio declining to ~53% (PQ: 56% and PY: 49%). PPoP stood at INR6.6b and declined ~17% YoY (~21% miss).
* Credit costs were lower than estimates and stood at ~2.7% (PQ: ~4.2% and PY: ~1.9%). The decline in credit costs was primarily because of lower credit costs in the MFI business.
* PAT (post NCI) in 4QFY25 declined ~44% YoY to INR2.1b. FY25 PAT (post NCI) declined ~79% YoY to INR3.8b.
Consol. AUM rises ~10% QoQ; strong growth in Gold loan AUM
* Consol. AUM declined 1% YoY but grew ~10% QoQ to INR783b. On-book loans grew ~8% YoY. Off-book formed ~30% of the AUM mix, with colending forming ~14% of the AUM mix.
* Gold loan AUM stood at ~INR210b and rose ~40% QoQ. Sequential growth in AUM was driven by gold loans (+40%), Home loans (+4%) and MSME loans (+2%). Microfinance declined ~5% QoQ.
* Home loans rose ~15% YoY and MSME loans grew ~18% YoY.
NIMs down ~10bp QoQ; calc. yields rise ~35bp QoQ
* Consol. yields/CoB rose ~35bp/30bp QoQ to ~13.3%/~9.7%.
* Calculated NIMs declined ~10bp QoQ.
Asset quality improves; MFI credit costs lower than estimates
* GS3 declined ~20bp QoQ to ~2.23%, while NS3 rose ~5bp QoQ to ~1.05%. PCR declined ~5pp QoQ to ~54%. Credit cost decline was primarily because of lower credit costs in the MFI business.
* IIFL (Standalone) CRAR stood at ~18.5%.
Valuation & View
* IIFL delivered a healthy performance during the quarter, driven by strong sequential growth in both gold loans and overall AUM. The rebound in gold loan disbursements reflects the company’s renewed focus on regaining market share and recapturing previously lost business in this segment. On the asset quality front, credit costs moderated on a sequential basis, primarily driven by a decline in MFI credit costs.
* The stock trades at 1x FY27E P/BV and ~6x P/E. We might revise our estimates after the earnings call on 9th May’25.
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