IIFL Capital Services Limited — Q1 FY26 earnings call

Call held 4 Aug 2025

Management summary

IIFL Capital reported a strong Q1 FY26 with consolidated revenue of ₹680 crores and PAT of ₹176 crores, driven by significant QoQ growth in institutional banking and other income. The company is actively building out its wealth management franchise, adding 50 RMs and targeting further growth in Distribution AUM. However, retail brokerage saw a YoY decline due to regulatory changes, and the cost-to-income ratio for the non-institutional business is expected to remain elevated this year during the transformation phase.

Highlights

  • Consolidated revenue for Q1 FY26 was ₹680 crores, up 19% quarter-on-quarter and 6% year-on-year.

  • Profit After Tax (PAT) increased 37% from ₹128 crores in the previous quarter to ₹176 crores in Q1 FY26.

  • Other income increased 73% QoQ to ₹63 crores, mainly due to mark-to-market gains on investments.

  • Institutional and investment banking revenue virtually doubled from the previous quarter.

  • The company has added about 50 RMs for its wealth management business and holds ₹35,700 crores in Distribution AUM.

Concerns

  • Retail brokerage declined 28% year-on-year due to regulatory changes in December 2024, specifically the reduction in expiry dates.

  • Distribution income decreased 24% quarter-on-quarter due to the seasonal spike in insurance sales in the last quarter of the previous year.

  • PAT decreased 4% year-on-year from ₹182 crores in Q1 FY25 to ₹176 crores in Q1 FY26.

Key financials

  1. Consolidated Revenue ₹680 Cr +6%YoY
  2. PAT ₹176 Cr -4%YoY
  3. Other Income ₹63 Cr +73%QoQ
  4. Employee Costs ₹176 Cr +36%YoY
  5. Admin Expenses ₹86 Cr +7%QoQ
  6. Depreciation ₹16 Cr +38%YoY
  7. Fees and Commission Expenses ₹134 Cr +5%YoY

What they filed

Q1 FY27: revenue up 2.3%, net profit up 4.5% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue645 583 537 617 572 −11%586 +1%644 +20%631 +2%
EBITDA266 245 186 221 213 −20%190 −22%224 +20%226 +2%
Net profit205 197 128 176 85 −59%188 −5%115 −10%184 +5%
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

  • Institutional and Investment Banking
    — Revenue Growth— Revenue Growth
  • Retail Brokerage
    15% Revenue Growth-28% Revenue Growth
  • Financial Product Distribution Income
    -24% Revenue Growth₹145 Cr Revenue37% Revenue Growth
  • Wealth Management (New Business)
    ₹8 Cr Revenue (Q1 FY26)₹40 Cr Revenue (FY25)₹70 Cr Cost (FY25)
  • Insurance Business (First Year Premium)
    ₹10 Cr Q1 FY26₹23 Cr Q4 FY25₹14 Cr Q1 FY25

Guidance & targets

Headcount

  • Wealth Management RMs Addition Headcount · Full year FY26 · Medium confidence 75-100 RMs
    See, as of now we have about 50. So, the 50 can go up to any number between 75, 100 in the full year. So, I do not have an exact number on that and I do not want to talk about precisely employee cost but it is better to look at the cost-to-income ratio.

    — R. Venkataraman

Profitability

  • Cost-to-Income Ratio (Non-Institutional Business) Profitability · FY26 · High confidence 75%
    I think the broad cost-to-income ratio for the retail or the non-institutional side will be in the range of 75% and I think this year it will be elevated and we hope to see benefits of scale trickling in next year.

    — R. Venkataraman

Other

  • Distribution AUM Growth Other · Ongoing · Medium confidence Growth
    Yes. Actually, I have a number but unfortunately, I cannot make any forward-looking statements but that is one segment which is I think a focus area. So, we are roughly at about Rs.35,700 crores and that is the number which we are targeting to grow.

    — R. Venkataraman

  • Investment Banking Deal Pipeline Closure Other · Full year FY26 · Medium confidence Optimistic for full year closure
    Yes. So, investment banking pipeline is quite strong and if you remember 1st Quarter of this year, which is Q4 FY25 was a lackluster quarter. So, now, when the market has revived, it picked up. Maybe given the current volatility, deal pipeline might again witness some slowdown. For the full year, I am quite optimistic about our deal pipeline and closure.

    — R. Venkataraman

What to watch in Q2 FY26

Wealth Management RMs Addition

Next quarter / Full year FY26
Current About 50 RMs
Target Progress towards 75-100 RMs (50-60% increase)

Why it matters

Indicates progress in building out the strategic wealth management franchise and its operational scale.

See, as of now we have about 50. So, the 50 can go up to any number between 75, 100 in the full year.

Risks & concerns

  • Regulatory changes impacting retail brokerage

    medium

    Regulatory changes in December 2024, including a reduction in expiry dates, led to a 28% YoY decline in retail brokerage.

    Management acknowledged

  • Market volatility impacting investment banking deal pipeline

    medium

    While the investment banking pipeline is strong, current market volatility might lead to a slowdown, though management remains optimistic for the full year.

    Management acknowledged

Q&A highlights

7 direct
Wealth Management RMs and Strategy Direct
Okay. As I mentioned earlier also, we have broadly added about 50 RMs and they are a mix of both HNI, ultra HNI as well as mass afloat RMs. Broadly speaking, the salary range will be in the number which you have said and we have a higher proportion of HNI, ultra HNI RMs but the build-out is happening as we speak.

Clarifies the initial scale and strategic focus for the new wealth management segment, including the type of RMs hired.

Asked by Prayesh Jain

Wealth Management Products and Processes Direct
But having said that, we are also trying to build our own manufacturing practice and if you remember we have a small AIF and PMS business which we have recruited people to scale it up. So, we will be manufacturing also. But having said that, we believe that manufacturing is one of the products we have and as a house, genetically and generically speaking, we are more open for open architecture model.

Details the product strategy for wealth management, indicating a mix of third-party distribution and in-house manufacturing.

Asked by Prayesh Jain

Wealth Management Cost-to-Income Ratio Direct
So, if you look at the new business which we call as for the transformation of the business which was the erstwhile retail, so we will see an elevated cost-to-income ratio for sure and I will just give you some broad numbers, in the sense that, so basically we will, as we speak, I think the broad cost-to-income ratio for the retail or the non-institutional side will be in the range of 75% and I think this year it will be elevated and we hope to see benefits of scale trickling in next year.

Provides a key profitability metric for the transforming retail/wealth business and a timeline for expected scale benefits.

Asked by Prayesh Jain

Revenue Breakup of 'Other Segment' Direct
I think there is a big component of interest income which is broadly about 100 crores. And that has been the same because previous year quarter also it was in the same ballpark number. I do not have the exact numbers in front of me but they were in the Rs.100 crores range interest income is there.

Clarifies the composition of the 'other' revenue segment, attributing a significant portion to interest income.

Asked by Chetan from Mahindra Mutual Fund

Quantifying Wealth Management Revenue and Costs Direct
So, I will give you just broad numbers. So, revenues have started coming in. So, if you see, I will give you some broad estimates because last year we had a revenue of roughly about Rs.40 crores and cost was about Rs.70 crores. So, we had a hit of about Rs.30 crores and this quarter we have made revenues of about Rs.8 crores and the cost data I do not have right now because we look at this on a full year basis.

Provides initial financial figures for the new wealth management business, highlighting its current net cost.

Asked by Chetan

Employee Cost Trajectory and RMs Addition Direct
See, as of now we have about 50. So, the 50 can go up to any number between 75, 100 in the full year. So, I do not have an exact number on that and I do not want to talk about precisely employee cost but it is better to look at the cost-to-income ratio. So, the cost-to-income ratio on a non-institutional business will be in the range of 75%.

Gives a clear target for headcount growth in the strategic wealth segment and reiterates cost expectations for the non-institutional business.

Asked by Aditya Bhatia

Distribution AUM Targets Partial
Yes. Actually, I have a number but unfortunately, I cannot make any forward-looking statements but that is one segment which is I think a focus area. So, we are roughly at about Rs.35,700 crores and that is the number which we are targeting to grow.

Highlights the current Distribution AUM and its strategic importance, despite management's inability to provide specific forward targets.

Asked by Aditya Bhatia

Overall FY26 Guidance Direct
No, unfortunately, we have not given any guidance. I am sorry.

Confirms the absence of broader financial guidance for the current fiscal year.

Asked by Aditya Bhatia

2 min read 6 chapters

Detailed narrative

Q1 FY26 Financial Performance Overview

IIFL Capital reported consolidated revenue of ₹680 crores for Q1 FY26, marking a 19% quarter-on-quarter increase and a 6% year-on-year growth. Profit After Tax (PAT) for the quarter stood at ₹176 crores, up 37% QoQ from ₹128 crores in the previous quarter. However, PAT saw a 4% year-on-year decline from ₹182 crores in Q1 FY25. Other income significantly contributed to the results, surging 73% QoQ to ₹63 crores, primarily driven by mark-to-market gains on investments.

Segmental Revenue Dynamics and Regulatory Impact

Institutional and investment banking revenue nearly doubled quarter-on-quarter, reflecting a strong recovery from Q4 FY25. Retail brokerage also increased by 15% QoQ. Conversely, financial product distribution income decreased 24% QoQ due to the typical Q4 FY25 spike from insurance sales. On a year-on-year basis, retail brokerage declined 28% due to regulatory changes implemented in December 2024, specifically the reduction in the number of expiry dates for derivatives.

Strategic Shift to Wealth Management and Headcount Growth

The company is actively transforming its legacy retail broking segment into a comprehensive wealth management and financial planning practice. As part of this strategy, IIFL Capital has added approximately 50 Relationship Managers (RMs), comprising a mix of HNI, ultra HNI, and mass affluent profiles. Management aims to increase the total RM headcount by 50-60% for the full year, targeting 75-100 RMs, to support this strategic build-out.

Cost Structure and Profitability Outlook for New Business

Employee costs for Q1 FY26 rose to ₹176 crores, a 36% increase year-on-year, primarily due to the increased headcount and wealth build-up initiatives. The cost-to-income ratio for the non-institutional business is projected to be around 75% for the current fiscal year, indicating an elevated cost phase during the transformation. Management anticipates that the benefits of scale will begin to materialize and trickle down from the next financial year, leading to improved profitability.

Market Share and Turnover Trends

The average daily turnover for Q1 FY26 was ₹2,23,232 crores, with derivatives accounting for ₹2,20,263 crores and cash for ₹2,968 crores. While this represents a QoQ increase from Q4 FY25's ₹1,92,871 crores, it is nearly 30% lower than the bumper Q1 FY25 turnover of ₹3,22,782 crores, primarily due to the aforementioned regulatory changes. The company maintained its F&O market share at 0.62% and cash market share at 2.57%.

Investment Banking Pipeline and Distribution AUM

The investment banking deal pipeline is described as quite strong, and management expressed optimism for deal closures throughout the full year, despite acknowledging potential slowdowns from current market volatility. The company's Distribution AUM currently stands at ₹35,700 crores, which is a key focus area for growth within the expanding wealth management business. The insurance business saw first-year premium collections of approximately ₹10 crores in Q1 FY26.

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