IIFL Finance Shares Fall Over 3% After Release of Q2 FY25 Earnings

On October 23, 2024, IIFL Finance Ltd released its results for the quarter ended September 30, 2024 (Q2 FY25). For this quarter, the company reported a net loss after tax of ₹93 crore (before non-controlling interest), reflecting a decline of 118% year-on-year (YoY). The loss before tax (LBT) for the quarter was ₹140 crore, down 120% YoY. 

In terms of core products, home loans grew by 21%, while loans against property assets under management (AUM) increased by 18%. Microfinance remained stagnant YoY, but digital loans saw a significant growth of 53% YoY. Conversely, gold loans experienced a decline of 54% YoY. Overall, the loan AUM decreased by 8% YoY to ₹66,964 crore.

Q2 FY25 Financial Performance Review

The company’s annualized return on equity (ROE) and return on assets (ROA) for Q2 FY25 stood at (5.3%) and (0.7%) respectively. The pre-provision operating profit for the quarter was ₹732 crore, down 21% YoY. Average borrowing costs increased by 12 basis points YoY and 3 basis points quarter-on-quarter (QoQ) to 9.15%. Notably, 98% of our loans are retail, with 69% of these being priority sector lending (PSL) compliant. The assigned loan book currently stands at ₹13,948 crore, while the co-lending book amounts to ₹8,489 crore. 

As of September 30, 2024, the gross non-performing asset (GNPA) ratio was 2.4%, an increase of 51 basis points YoY, while the net non-performing asset (NNPA) ratio was 1.1%, up 3 basis points YoY. With the implementation of Expected Credit Loss under Ind AS, the provision coverage on NPAs stands at 136%. The total capital adequacy ratio (CRAR) was 26.3%, well above the minimum regulatory requirement of 15%, supported by capital raised during the quarter. The total number of branches increased to 4,810 as of the end of Q2 FY25, up from 4,774 in the previous quarter.

IIFL Finance Business Segment Review

• Home Loans: By the end of the quarter, retail home loan assets grew by 21% YoY and 4% QoQ to ₹29,116 crore. Our primary focus in this segment remains on affordable and non-metro housing loans. We operate 387 dedicated home loan branches across India and are recognized as India’s number one housing finance company for loans below ₹20 lakh.
• Gold Loans: As of September 30, 2024, the gold loan AUM was ₹10,797 crore, a decline of 54% YoY and 27% QoQ. Gold loans are offered through our extensive network of 2,745 branches across 25 states and 4 Union Territories, targeting salaried, self-employed, and MSME customer segments.
• Microfinance: The microfinance loan AUM stood at ₹11,311 crore, remaining stagnant YoY and down 6% QoQ as of September 30, 2024. Our microfinance customer base comprises 29.7 lakh customers, serviced through 1,645 dedicated microfinance branches across India.
• Loan Against Property: The AUM for loan against property grew by 18% YoY and 1% QoQ to ₹8,502 crore as of September 30, 2024.
• Digital Loans: Digital loans AUM increased by 53% YoY and 18% QoQ, reaching ₹5,419 crore as of September 30, 2024.
• Construction and Real Estate: The AUM for construction and real estate stood at ₹1,440 crore as of September 30, 2024.

IIFL Finance Liquidity Position

As of September 30, 2024, cash and cash equivalents, along with committed credit lines from banks and institutions, totalled ₹3,882 crore. During the quarter, we raised ₹3,216 crore through term loans, bonds, and commercial paper, including ₹1,882 crore raised via direct assignment of loans.

On October 24, 2024, IIFL Finance shares opened at ₹406.00 and touched the day low of ₹405.10 at 09:30 AM, reflecting a fall of 3.37% from the previous close.

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