At a Glance
IIFL Finance’s Q1 FY26 results are like a Bollywood sequel—gold loans are the hero, NPAs behave, but the villain (low ROE) refuses to die. Revenue rose to ₹2,953 Cr (+13% QoQ), PAT jumped 9% YoY to ₹274 Cr, yet margins slipped to 13% from the glory days of 25%+. With AUM swelling to ₹76,700 Cr and 510 new branches, expansion is on steroids. Stock at ₹504 trades at 25x P/E—priced neither cheap nor premium, just confused.
Introduction
Picture this: an NBFC juggling home loans, gold loans, microfinance, and developer lending, while RBI stares at every move. That’s IIFL Finance for you. Over the years, it has morphed from a brokerage house to a lending giant. Q1 FY26 shows growth is alive, but profitability has taken a holiday. With rising borrowing costs and a low interest coverage ratio, investors must ask: is IIFL growing profitably or just growing for headlines?
Business Model (WTF Do They Even Do?)
IIFL Finance is a diversified NBFC offering:
- Gold Loans – ₹27,274 Cr AUM; high-margin and growing.
- Home Loans – Affordable housing focus.
- Business & Microfinance Loans – High yield, high risk.
- Developer & Capital Market Finance – Risky segments with regulatory oversight.
Income is interest-driven, with fee-based earnings sprinkled on top. In this game, cost of funds and asset quality decide survival.
Financials Overview
| Particulars (₹ Cr) | Q1 FY26 | Q1 FY25 | YoY Change |
|---|---|---|---|
| Revenue | 2,953 | 2,621 | +13% |
| Financing Profit | 397 | 470 | -15% |
| Net Profit | 274 | 251 | +9% |
| NIM / Margin % | 13% | 18% | Down |
Revenue growth is healthy, but profits didn’t scale proportionally due to higher interest and operating costs. Margins are compressing like an overused stress ball.
Valuation
Here’s the valuation breakdown:
- P/E Method:
- EPS (TTM) ≈ ₹7.6
- Sector P/E ≈ 20x
- FV ≈ 7.6 × 20 = ₹152
- P/B Method:
- BV ≈ ₹292
- Sector P/B ≈ 2x
- FV ≈ 292 × 2 = ₹584
- DCF (Quick):
- FCF unstable, growth 10%, WACC 13%
- FV ≈ ₹400–500
👉 Fair Value Range: ₹400–500. Current ₹504 = slightly on the expensive side.
What’s Cooking – News, Triggers, Drama
- Branch Expansion: RBI greenlights 510 new branches—future growth incoming.
- Gold Loan Dominance: Growing share of AUM keeps yields attractive.
- AI Leadership: New Chief AI & Innovation Officer—buzzword or game-changer?
- Risks: Low ROE (5%), rising borrowing costs, and regulatory scrutiny on NBFCs.
Balance Sheet
| ₹ Cr (Mar 2025) | Value |
|---|---|
| Assets | 67,644 |
| Liabilities | 55,317 |
| Net Worth | 12,327 |
| Borrowings | 51,533 |
Roast: Borrowings are higher than your caffeine intake on Monday morning. Leverage is the name of this game.
Cash Flow – Sab Number Game Hai
| ₹ Cr | Mar 2023 | Mar 2024 | Mar 2025 |
|---|---|---|---|
| Operating | -5,225 | -8,716 | -4,781 |
| Investing | -2,716 | 468 | -1,149 |
| Financing | 5,361 | 7,088 | 5,526 |
Roast: Operating cash flow is negative. Profits exist, but cash is running out the back door.
Ratios – Sexy or Stressy?
| Metric | Value (FY25) |
|---|---|
| ROE | 5% |
| ROCE | 9% |
| P/E | 25x |
| PAT Margin | 13% |
| D/E | 4.2 |
Verdict: Leverage high, ROE low. Investors are betting on growth, not efficiency.
P&L Breakdown – Show Me the Money
| ₹ Cr | Mar 2023 | Mar 2024 | Mar 2025 |
|---|---|---|---|
| Revenue | 8,444 | 10,472 | 10,234 |
| Financing Profit | 2,263 | 2,734 | 1,479 |
| PAT | 1,608 | 1,974 | 578 |
Roast: Profits collapsed in FY25. Q1 FY26 is recovering, but scars remain.
Peer Comparison
| Company | AUM (₹ Cr) | PAT (₹ Cr) | P/E |
|---|---|---|---|
| Bajaj Finance | 7,31,000 | 17,425 | 32x |
| Shriram Finance | 4,38,000 | 8,508 | 14x |
| Muthoot Finance | 2,02,000 | 5,333 | 20x |
| IIFL Finance | 76,700 | 847 | 25x |
Roast: IIFL is a small fish in a big NBFC pond, yet trades at mid-level P/E. Premium? Meh.
Miscellaneous – Shareholding, Promoters
- Promoters: 24.9% (flat for years)
- FIIs: 26.6%
- DIIs: 8%
- Public: 40%
Promoter stake is low; not much skin in the game compared to peers.
EduInvesting Verdict™
IIFL Finance is expanding aggressively, riding on gold loans and branch additions. Q1 FY26 shows growth, but profitability metrics like ROE and interest coverage are weak. Cash flows remain concerning, and valuations are not exactly a steal.
SWOT Analysis
- Strengths: Strong gold loan franchise, diversified portfolio, branch network.
- Weaknesses: Low ROE, high leverage, negative operating cash flows.
- Opportunities: Rising credit demand, AI-driven efficiency.
- Threats: RBI regulations, rising cost of funds, competition from fintechs.
Final Word: Growth is there, but it’s not free. At ₹504, the stock assumes smooth execution. Conservative investors might prefer watching from the sidelines.
Written by EduInvesting Team | 30 July 2025SEO Tags: IIFL Finance, NBFC, Gold Loans, Q1 FY26 Results
