IIFL Finance Ltd Q2FY26 – AUM rockets past ₹90,000 Cr even as gold loan hangover continues | Net profit ₹418 Cr, retail focus 98%, Fitch upgrades outlook to Positive
1. At a Glance
Ladies and gentlemen, welcome to the most entertaining circus in India’s NBFC universe – IIFL Finance Ltd. The company that once loaned against everything shiny and yellow now claims to be the retail lending messiah with 98% of its book secured by Indian middle-class aspirations. As of Q2FY26, IIFL’s AUM hit ₹90,122 crore, up from ₹76,700 crore in FY24 — that’s like taking steroids in an RBI-approved gym. Quarterly PAT clocked ₹418 crore, up 25% YoY, with total income touching ₹3,305 crore. But hold your applause — the RBI’s gold loan embargo still hangs over them like a sword made of 24-carat irony.
The stock closed at ₹542, up 26.8% in the last three months, with a market cap of ₹23,017 crore. At a P/E of 26.8x, investors are clearly pricing optimism faster than IIFL prices its unsecured MSME loans. Return ratios, however, still look like a post-Covid fitness comeback — ROE at 4.9%, ROCE at 8.8%, and Debt-to-Equity flexing at 4.53x. The company is in full retail-thrust mode — home loans (35%), gold loans (30%), microfinance (17%), and digital/MSME loans (5%) make up the colorful thali of its lending platter.
So what happens when an NBFC tries to balance retail dreams with RBI nightmares? Let’s find out.
2. Introduction
Remember those kids in school who topped the class but still got called to the principal’s office for “disciplinary reasons”? That’s IIFL Finance in FY26. On one hand, it’s growing fast — AUM up 17% YoY — and on the other, RBI slapped it with a “no new gold loans for you” ban in March 2024. That’s like being told you can run but not breathe.
Founded as India Infoline back in the dot-com days, IIFL has shapeshifted more than your favorite Netflix anti-hero. It went from broking to wealth, to lending, and now to “we only do retail, we swear”. After hiving off its wealth and securities arms into IIFL Wealth (now 360 ONE) and IIFL Securities, the company positioned itself as a pure-play retail NBFC. And credit where due — retail now forms 98% of its loan book, of which 67% qualifies for Priority Sector Lending (PSL).
But the road to ₹90,000 crore AUM hasn’t been all smooth. The gold loan business — once 24% of AUM in FY20 and a crown jewel — suddenly turned into a compliance crisis after RBI found “assaying deviations.” Translation: the gold wasn’t as shiny as claimed. Since then, management’s been busy doing what every Indian student does post-exam results — damage control.
Still, IIFL deserves some applause for staying alive and profitable while peers got swallowed by bad assets or bad press. Whether this retail-heavy model delivers real wealth or just more “compliance presentations” will decide its legacy.
3. Business Model – WTF Do They Even Do?
Think of IIFL Finance as a lending buffet. You walk in, and depending on your appetite, they serve you:
Home Loans (35%) – The company’s wholesome, “maa-ke-haath-ka-khaana” segment. Focused on affordable housing under ₹20 lakh, mostly in non-metros. Operates 389 branches under IIFL Home Finance, which recently got a new CEO, Girish Kousgi (ex-Can Fin Homes fame).
Gold Loans (30%) – Once the spicy biryani of IIFL’s lending platter, now on temporary RBI diet. Offered through 2,750 branches across India, but new disbursals are paused. Existing portfolio is being serviced, not expanded.
Microfinance (17%) – The chaat corner. Small-ticket loans to women entrepreneurs through 1,648 branches. Strong social impact narrative — and equally strong repayment risk when monsoons or elections arrive.
Loan Against Property (11%) – The paratha of the buffet. Good, heavy, and dependable, though declining from 13% in FY20.
Digital MSME & Personal Loans (5%) – The “startup-style” dessert. Fast-growing, algorithm-based, fintech-partnered segment that lends small-ticket business loans (under ₹10 lakh) through the MyMoney app.
Construction Finance (2%) – The leftover from the real estate party. This segment has been shrinking faster than your patience at an RTO office.
In short: IIFL makes money lending to people who actually pay back — the salaried, the self-employed, and the “gold-owning aunties.” The model is retail-focused, asset-backed, and digitally enabled. Think of it as HDFC-lite meets Paytm-with-sanity.
4. Financials Overview
Metric
Latest Qtr (Q2FY26)
YoY Qtr (Q2FY25)
Prev Qtr (Q1FY26)
YoY %
QoQ %
Revenue (₹ Cr)
3,305
2,556
2,953
29.3%
11.9%
EBITDA (₹ Cr)*
1,850
1,550
1,689
19.3%
9.5%
PAT (₹ Cr)
418
334
274
25.1%
52.6%
EPS (₹)
8.86
6.79
5.49
30.5%
61.3%
*EBITDA approximated as 56% OPM per screener data.
Commentary: Revenue’s growing like Diwali bonuses, but profit margins still wear a “Cautious RBI-approved” tag. PAT at ₹418 crore is commendable considering the gold loan lockdown. EPS bounced 61% QoQ — that’s
