IIFL Finance

Following the lifting of the RBI embargo, IIFL's gold loan AUM has rebounded from ₹10,000 crores to ₹15,000 crores. However, management admitted to a 2% yield compression as they offer lower rates to win back customers in a competitive market. They expect to reach ₹22,000-23,000 crores by March 2025, with yields normalizing only by Q1 FY26.

The MFI segment (Samasta) is struggling with rising consumer leverage and stagnant real income growth. Management has guided for a steep credit cost of 8% to 8.5% for the year. They noted that borrower sentiment has been further impacted by regional regulations, such as the Karnataka government's ordinance, leading to a deterioration in repayment culture.

In response to unsecured credit stress, IIFL is aggressively shifting its portfolio mix. The long-term target is to bring unsecured loans down to 15% or lower of the total portfolio. Microfinance, which currently makes up 14-15% of the mix, is targeted to drop to 10% or less over the next 2-3 years, while Gold and Home loans are intended to each represent one-third of the total book.

Standalone capital adequacy dropped to 22% from 26% QoQ. This was attributed to the inability to assign (sell) loans due to RBI seasoning requirements (3-6 months) following the restart of gold loan originations. While liquidity remains tight, the company raised high-cost dollar bonds in January to bolster its buffer, which will impact margins in the coming quarter.

Management addressed the Income Tax search conducted in late January/early February 2025. Nirmal Jain clarified that the search concluded on February 3rd and that the company is awaiting the appraisal report from the assessing officer. He maintained that the company follows high standards of governance and that no immediate undisclosed income was declared during the search.