IIFL Finance Limited — Q4 FY26 earnings call

Call held 29 Apr 2026

Management summary

IIFL Finance delivered a strong Q4 FY26, with consolidated PAT rising 24% QoQ to INR 623 crores and loan AUM growing 38% YoY to INR 1,08,180 crores, primarily fueled by gold loans. Asset quality saw significant improvement, with Gross NPA at 1.5% and Net NPA at 0.7%. The company is strategically focused on secured lending, capital-efficient growth through co-lending, and AI-led productivity, while awaiting the outcome of a special income tax audit and planning for a demerger of its Home Finance and Samasta subsidiaries.

Highlights

  • Consolidated PAT before non-controlling interest increased to INR 623 crores, up 24% on a quarter-on-quarter basis.

  • Consolidated loan AUM grew by 38% YoY and 10% QoQ to INR 1,08,180 crores, driven by strong gold loan performance.

  • Gold loan AUM reached INR 52,581 crores, up 150% YoY and 11% QoQ, with a healthy tonnage of 62 tons.

  • Asset quality improved significantly with Gross NPA at 1.5% (down 77 bps YoY) and Net NPA at 0.7% (down 32 bps YoY).

  • Quarterly average cost of borrowing decreased by 8 bps YoY and 25 bps QoQ to 9.16%, reflecting efficient liability management.

Concerns

  • Profitability remains subdued partly due to higher-than-expected stress in the legacy micro LAP portfolio, which the company has now exited.

  • The income tax special audit assessment orders are pending, creating uncertainty regarding potential demands, though management expresses confidence in no material adverse outcome.

  • Housing finance AUM growth was muted in FY26 due to the strategic pivot and exit from certain segments, impacting leverage and ROA/ROE.

Key financials

2 periods

Headline

  • Consolidated PAT (pre-NCI)
    ₹623 Cr
    QoQ +24%
  • Consolidated Loan AUM
    ₹1.08L Cr
    YoY +38% QoQ +10%
  • Gold loan AUM
    ₹52,581 Cr
    YoY +150% QoQ +11%
  • Gross NPA
    1.5%
    YoY -0.77%
  • Net NPA
    0.7%
    YoY -0.32%

annualized Q4

  • ROE
    17.9%

What they filed

Q1 FY27: revenue up 32.7%, net profit up 160.2% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue2,556 2,443 2,591 2,953 3,305 +29%3,427 +40%3,692 +42%3,919 +33%
Net profit-93 82 251 274 418 +549%501 +511%623 +148%713 +160%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Segment breakdown

  • NBFC
    17.8% Capital Adequacy
  • HFC
    42.1% Capital Adequacy
  • Samasta Microfinance
    26.5% Capital Adequacy

Capital allocation

high confidence
  • Debt Debt disclosed Cost 9.2%
    • New borrowing Raised through term loan, bonds, commercial papers ₹28,165 Cr
    • New borrowing Raised through direct assignments of loans ₹7,046 Cr
    Our quarterly average cost of borrowing decreased 8 basis points Y-o-Y and 25 basis points on a quarter-on-quarter basis to stand at 9.16%.
  • Liquidity Cash ₹6,638 Cr Cash and cash equivalents, including committed credit lines, are adequate to meet near-term liabilities and fund continuous growth momentum. The company maintains a positive ALM.
    Our cash and cash equivalent, including committed credit lines from banks stood healthy at around INR6,638 crores and are adequate to meet not just our near-term liabilities, but also to fund our continuous growth momentum. We have a positive ALM, thereby inflows covered at far exceed the expected outflows across all buckets with net gearing standing at around 3.8.

Guidance & targets

Volume

  • Overall AUM growth Volume · FY27 · High confidence 20% to 25%
    So, I think if they remain here, we should see AUM growth of around 20% to 25%.

    — Nirmal Jain

  • Gold Loan AUM growth Volume · FY27 · High confidence 20% to 25%
    if the prices remain at similar levels, at these current levels, then we should see 20% to 25% AUM growth.

    — Nirmal Jain

  • Housing Finance AUM growth Volume · FY27 · High confidence 18% to 20%
    we are expecting a book growth of about 18%, 20% in FY '27

    — Girish Kousgi

  • Housing Finance disbursement growth Volume · FY27 · High confidence 25% to 27%
    and disbursement growth would be about 25% to 27%.

    — Girish Kousgi

  • Co-lending share Volume · High confidence 20% or so

    Previously 6%, 15%, 14%, 13% → 20% or so

    we would like it to grow to 20% or so.

    — Nirmal Jain

  • Microfinance AUM growth Volume · FY27 · High confidence Around 20%
    We will be growing overall on around 20% odd.

    — Venkatesh

Profitability

  • Credit cost Profitability · FY27 · High confidence 1.5% to 1.7%

    Previously 2.7% to 3% → 1.5% to 1.7%

    Next year, our credit cost on the whole will be around 1.5% to 1.7%.

    — Nirmal Jain

  • ROA Profitability · FY27 · Medium confidence 3% to 3.5%

    Previously 2.4% → 3% to 3.5%

    So that 2.4% ROA should grow by -- I think it should end at 3%, 3.5%

    — Nirmal Jain

  • Housing Finance yields (affordable) Profitability · FY27 (start with) · High confidence 12% plus
    Now we are pivoting towards higher yield, which will be to start with about 12% plus this year.

    — Girish Kousgi

Capacity

  • Housing Finance new branches Capacity · FY27 · High confidence About 100
    We plan to open about 100 branches this year in a phased manner.

    — Girish Kousgi

Other

  • Total off-book proportion (DA + co-lending) Other · High confidence 40% to 45%

    Previously 34% to 36% → 40% to 45%

    Our endeavor will be to take it to 40%, 45%.

    — Nirmal Jain

Debt

  • Cost of funding reduction (upon rating improvement) Debt · Upon AA plus rating · High confidence 100 to 120 bps
    I believe that our cost of funding can go down easily by 100 to 120 basis points once the rating improves.

    — Nirmal Jain

What to watch in Q1 FY27

Income Tax Assessment Order for IIFL Finance

Next quarter (Q1 FY27)
Current Expected in 'few days' or 'a week'
Target Order received and disclosed

Why it matters

The outcome and potential appeal process will clarify the financial impact of the special audit, which is a significant regulatory event.

I believe that for IIFL Finance also, the order is expected very shortly. I think within few days or a week, we should get it.

Risks & concerns

  • Income Tax Special Audit Outcome

    high

    Assessment orders for the income tax special audit are expected shortly, with potential for contested demands, though management is confident of no material adverse outcome.

    Both acknowledged

  • Legacy Micro LAP Portfolio Stress

    medium

    Higher-than-expected stress in the legacy micro LAP portfolio contributed to subdued profitability, leading to the company's exit from this segment.

    Management acknowledged

  • Competition in Housing Finance

    medium

    Increased competition from other HFCs in the affordable and lower ticket size housing segments is noted, but management believes the market is large enough and their strategy will mitigate this.

    Analyst acknowledged

Q&A highlights

7 direct
Income Tax Special Audit Outcome and Financial Impact Partial
I cannot respond to speculative report. So assessment orders have started coming. Quite a few group companies' assessment order has come. So I believe that in a few days' time, our assessment orders will also come. It's just a matter of few days.

Management confirms assessment orders are imminent for IIFL Finance following other group entities but refrains from quantifying the potential financial impact, stating they will appeal any adverse demands.

Asked by Yash from Dante Equity

Demerger of IIFL Home Finance and Samasta Finance Direct
in IIFL Home Finance, we have another private equity investor ADIA. Obviously, they need to exit, and there will be the most elegant way to get it listed separately and give exit to private equity investor is through a demerger... I mean I don't think we can give you any time line this is not something -- the Board has to decide.

Management confirms the strategic rationale for demerging IIFL Home Finance and Samasta to facilitate private equity exit and simplify the structure, but explicitly states no timeline can be provided as it's a Board decision.

Asked by Yash from Dante Equity

Gold Loan Growth Strategy and Compliance with New Regulations Direct
So first is the new guidance. So we are fully complied with the new guidelines from 1st April. And basically, loans above INR2.5 lakh, they want the credit assessment to be done and the loans to be monitored. So we have set up our system and detailed credit assessment is done for all the loans above INR2.5 lakh.

Management clarifies full compliance with new RBI guidelines for gold loans above INR 2.5 lakhs, indicating operational readiness and system adjustments to continue growth in this key segment.

Asked by Shubhranshu Mishra from PhillipCapital

Housing Finance Strategic Pivot and Growth Drivers Direct
we plan to grow from this year onwards. And the guidance what we have given is about 18% to 20% on AUM on the book and 25% to 27% on disbursement... we took a decision of not getting into prime because to start with, you will have a challenge on the margin.

Management details the strategic shift in housing finance towards affordable and emerging segments, exiting the prime segment due to margin pressures, and provides specific AUM and disbursement growth targets for FY27.

Asked by Gaurav Khandelwal from JP Morgan

Impact of Gold Price on Tonnage Growth Direct
customer requirement of loan basically is really not dependent on the price as such. But whenever the gold prices go up, then and you will see with other gold companies also, you have probably seen some decline also there. But your customers will keep only as much gold as required. So the demand for credit is there. And sometimes tonnage will follow that.

Management explains that gold loan tonnage growth is driven by customer credit requirements rather than solely gold price fluctuations, providing insight into the business's underlying demand dynamics.

Asked by Pranay Shah

Focus on LAP Loans in Home Finance Direct
Absolutely. I think we will be focusing on LAP both on affordable as well as emerging. We are completely out of prime as a segment, but we will focus on LAP... Our focus is very clearly there on LAP as well.

Management confirms a strategic emphasis on Loan Against Property (LAP) within the affordable and emerging housing finance segments, highlighting its higher yield potential.

Asked by Yash

Microfinance Segment Growth Drivers Direct
Our key growth driver would be the microfinance loans. Our micro LAP would also grow. We will be growing overall on around 20% odd. So I mean, within the thing, micro LAP is the only thing which we are other than the microfinance, which we are focusing on actually.

Management clarifies that microfinance loans and micro LAP are the primary growth drivers within the microfinance segment, targeting around 20% overall growth.

Asked by Yash

Improving Standalone Credit Rating and Cost of Funds Direct
Our NPA is around 0.7-odd so which again is pretty you know, healthy. Now I think the only one thing that we need to work on is our capital adequacy, which either we improve our co-lending and off-book significantly or we raise capital... I believe that our cost of funding can go down easily by 100 to 120 basis points once the rating improves.

Management outlines the strategy to improve the credit rating by focusing on size, profitability, asset quality, and capital adequacy, projecting a significant 100-120 bps reduction in the cost of funds upon achieving an AA plus rating.

Asked by Murli Khandelwal

2 min read 6 chapters

Detailed narrative

Robust AUM Growth Driven by Gold Loans

IIFL Finance reported a strong consolidated loan AUM of INR 1,08,180 crores for Q4 FY26, marking a 38% year-on-year and 10% quarter-on-quarter increase. Gold loans were a standout performer, with AUM growing 150% YoY and 11% QoQ to INR 52,581 crores, supported by 62 tons of gold. Core products, including home, gold, MSME, and microfinance, constituted 96% of the overall AUM, growing 45% YoY and 11% QoQ to INR 1,04,198 crores.

Significant Improvement in Asset Quality and Profitability

The company demonstrated a material improvement in asset quality, with Gross NPA at 1.5% and Net NPA at 0.7%, representing a reduction of 77 basis points and 32 basis points respectively compared to the same period last year. Consolidated profit after tax before non-controlling interest stood at INR 623 crores, up 24% QoQ. The annualized ROE for Q4 was 17.89%, and ROA was 2.97%, indicating a return to stable profitability levels.

Strategic Focus on Secured Lending and Capital-Efficient Growth

IIFL's strategy is centered on secured lending, primarily gold loans and mortgages, and capital-efficient growth through co-lending and off-book partnerships. The assigned loan book grew 85% YoY and 11% QoQ to INR 23,704 crores, while the co-lending asset book increased 36% YoY and 9% QoQ to INR 14,384 crores. The company aims to increase its total off-book proportion to 40-45% from the current 34-36%.

Housing Finance Reorientation and FY27 Outlook

The Housing Finance business has reoriented its strategy, exiting higher-risk micro LAP and prime segments to focus on affordable and emerging home loans. For FY27, the company targets an 18-20% book growth and 25-27% disbursement growth. This will be supported by opening approximately 100 new branches and pivoting towards higher yields, starting with 12% plus for affordable housing.

Income Tax Audit and Potential Demerger

IIFL Finance is awaiting assessment orders for an income tax special audit, with management expressing confidence that there will be no material adverse outcome and a commitment to appeal any demands. The company also confirmed the logical intent to demerge IIFL Home Finance and Samasta Finance to provide an exit for private equity investors and simplify the corporate structure, though no specific timeline was provided for this Board-level decision.

FY27 Guidance: AUM, Credit Cost, and ROA Improvement

For the fiscal year 2027, IIFL Finance projects an overall AUM growth of 20-25%. Management expects a significant reduction in credit costs, targeting 1.5-1.7% for FY27, down from 2.7-3% in FY26. This reduction, combined with growth, is anticipated to improve ROA to 3-3.5% from the current 2.97%, signaling a positive outlook for profitability.

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