Target: ₹800
CMP: ₹641.55
IIFL Finance (IIFL) is a diversified NBFC with a strong presence in various retail business segments. Its core products include gold loans, home loans, microfinance, LAP and unsecured business loans. IIFL’s consolidated AUM stood at about ₹73,100 crore as on Sep’23 and it delivered an AUM CAGR of 22 per cent over FY21-H1-FY24.
IIFL is present in 26 states/UTs and has a distribution network of 4,600 branches. The company has an asset-light business model with co-lending and assignments contributing 15 per cent and 25 per cent to the AUM mix, respectively.
IIFL has strengthened its retail product segments through aggressive expansion in its branch distribution network (37 per cent of branches have over 2-year vintage), investments in technology and digital processes/partnerships.
The company has gained a first-mover advantage in co-lending, a strategy known for its capital efficiency, risk mitigation, and positive impact on RoE. This has positioned IIFL for a strong AUM CAGR of about 25 per cent over FY23-FY26.
Key risks: Potential adverse regulations reducing the demand for co-lending/ assignments; a sharp decline in gold prices, regulatory limitations on pricing within the Microfinance sector; and cyclicality in MFI and gold loan growth.