Consolidated Financial Performance (Q2 FY27)

  • Assets Under Management (AUM): INR 1,24,268 crores, representing a growth of 8% QoQ and 38% YoY.
  • Net Interest Income (NII): INR 1,481 crores, up 13% QoQ.
  • Total Income: INR 2,340 crores, up 6% QoQ.
  • Pre-Provision Operating Profit (PPOP): INR 1,355 crores, up 8% QoQ.
  • Loan Loss Provision: INR 281 crores, down 5% QoQ.
  • Profit After Tax (PAT): INR 805 crores, up 13% QoQ and 93% YoY. This is the first time quarterly PAT has crossed the INR 800 crore milestone.
  • Half-Yearly PAT (H1 FY27): INR 1,518 crores.
  • Return on Assets (RoA) - Annualized H1: 3.1%.
  • Return on Equity (RoE) - Annualized: 20.1%.
  • Portfolio Yield: 16.5% (down 3 bps QoQ).
  • Cost of Borrowing: 9.08% (up 3 bps QoQ).
  • Net Interest Spread: 7.42% (narrowed by 6 bps QoQ).
  • Operating Expense / Avg AUM: 3.3% (down from a peak of 4%).

Asset Quality & Provisions (Consolidated)

  • Gross NPA: 1.48% (improved by 7 bps QoQ).
  • Net NPA: 0.87%.
  • Provision Coverage Ratio: 91%.
  • 1-90 Days Past Due (DPD): 9% of portfolio.
  • 90+ DPD: 1.5% of portfolio.

Portfolio Composition & Strategy

  • Secured Portfolio: 90% of total AUM.
  • Core Businesses (Gold, Home, MSME, Microfinance): Constitute 97% of AUM, growing 43% YoY.
  • Gold Loan AUM: ~53% of total portfolio.
  • Home Loan AUM: ~27% of total portfolio.
  • Off-Book AUM (Assignment & Co-lending): INR 42,796 crores, constituting 34% of consolidated AUM. Involves 18 active banking partners.
  • Strategic Pillars: Focus on secured lending, capital-light growth (via co-lending), strong funding & liquidity, AI integration, branch-led distribution, and credit/cost discipline.

Liquidity & Capital Adequacy

  • Liquidity (Cash + Undrawn Credit Lines): INR 13,805 crores (all-time high), providing coverage for near-term liabilities.
  • ALM: Surplus across all maturity buckets.
  • Funding Profile: Diversified across term loans, debentures, refinancing, ECB, and securitization.
  • Consolidated Capital Adequacy Ratio (CAR): 23.5%.
  • Net Gearing: 4.1x (stable from 4x in previous quarter).
  • Shareholders' Equity: INR 15,432 crores.

Stand-alone Performance (IIFL Finance Ltd)

  • AUM: INR 70,382 crores (first time crossing INR 70k cr), up 11% QoQ. 97% secured.
  • NII: Up 21% QoQ.
  • PAT: INR 548.5 crores, up 17% QoQ.
  • Yield: 18.6% (up 12 bps QoQ).
  • Spread: 9.2% (up 11 bps QoQ).
  • OpEx / Avg AUM: 3.1%.
  • Gross NPA: 1.3% (up 3 bps QoQ).
  • CAR: 17.03%.
  • Net Gearing: 4.7x.
  • Gold Loan Contribution: ~93% of stand-alone AUM.

Subsidiary Performance

IIFL Home Finance Limited:

  • AUM: INR 43,070 crores, up 4% QoQ.
  • Disbursements: INR 3,498 crores, up 10% QoQ.
  • PPOP: INR 330 crores, up 6% QoQ.
  • PAT: INR 188.7 crores (broadly stable).
  • Gross NPA: 1.38% (improved by 8 bps QoQ).

IIFL Samasta Finance Limited (Microfinance):

  • AUM: INR 10,816 crores (stable). Maintained calibrated growth approach.
  • PAT: INR 69 crores, up 13% QoQ (supported by lower credit cost).
  • Gross NPA: 2.82% (improved by 46 bps QoQ).
  • Net NPA: 0.86% (improved by 14 bps QoQ).

Fundraising & Ratings

  • H1 FY27 International Fundraise: USD 800 million through bond issuances.
  • Q2 FY27 Issuance: USD 300 million social bond tap issuance, which was 2.3x subscribed.
  • Rating Action: Fitch upgraded the company's rating to 'BB-'.
  • Innovation: Conducted a small issue of tokenized bonds.

Capital Raise Plans

  • The company has shareholder approval to raise equity capital in the parent (IIFL Finance Ltd).
  • The raise is planned for Q3 FY27 or earliest opportunity, with a potential dilution of 10% to 20%.
  • The purpose is to strengthen the balance sheet, support growth (particularly in the capital-intensive stand-alone entity), and potentially aid credit rating upgrades.
  • Options include a QIP or private placement. Divestment of subsidiaries (Home Finance, Samasta) is also a considered option for unlocking capital but is not imminent.

Key Q&A Highlights & Management Commentary

  • Gold Loan NPA: Increased ~30 bps QoQ to ~0.9%, attributed to a slight decline in gold prices towards quarter-end and timing of customer payments. Management stated NPAs could spike to 1-3% in a scenario of a 10% gold price correction, but ultimate losses are expected to be minimal due to collateral coverage. LTV for 90+ DPD cohort is ~85%.
  • IRDAI Insurance Commission Draft Guidelines: Potential impact discussed. For FY26, group insurance commission was ~INR 240 crores (~10% of PBT). Breakdown: IIFL Finance (stand-alone) ~INR 3 cr, Samasta ~INR 78 cr, HFC ~INR 160 cr. Management is engaging with partners to minimize impact, which is expected in FY28. For HFC, insurance income is 4.5-5% of total revenue.
  • Yield Compression (MSME/Home Loans): Yields declined as the company pivots to superior quality borrowers (lower yield, better asset quality). This is a strategic shift to reduce volatility and collection costs over the long term, even if it temporarily impacts ROA.
  • Growth Guidance (FY27): Reiterated target of ~25% AUM growth and similar profit growth, aiming to maintain RoE at/above 20%.
  • Segment Growth:
  • Home Finance: Disbursement growth is strong (64% YoY in H1). AUM growth is expected to accelerate in H2 FY27, in line with 18-20% guidance. Focus is on affordable housing (higher yield).
  • Microfinance (Samasta): Growth was muted in H1 due to cautious approach in certain geographies. Disbursement run-rate targeted to increase from ~INR 550 cr in Sept to ~INR 1000 cr per month by Mar'27.
  • AI Strategy: Reported ~30% productivity improvement in piloted processes (audit, collections, customer service via chatbots/WhatsApp). Being deployed in collections (1-90 DPD buckets) and lead generation.

Confirmation

The company confirmed that no unpublished price sensitive information was shared during the call.