IIFL Finance (IIFL) Q1 24/25 earnings summary

Executive summary

• RBI imposed a cease and desist order on new gold loan disbursals, causing gold loan AUM to drop from over INR 26,000 crore to INR 12,162 crore, with over 1 million customer accounts closed and jewelry returned without asset quality issues.

• Unaudited consolidated and standalone Q1 FY25 results were approved, with an unmodified auditor conclusion.

• Remedial actions, compliance enhancements, and management strengthening have been implemented, with ongoing engagement with RBI and expectations for restriction removal.

• No retrenchment or branch closures; other business lines continue, with a focus on compliance and risk management.

• The company raised ₹1,271.83 crore via a rights issue in May 2024 to strengthen capital adequacy.

Financial highlights

• Q1 FY25 consolidated net profit after tax was ₹338.16 crore, down 28% YoY and 21% QoQ; standalone net loss was ₹22.66 crore.

• Pre-provision operating profit was ₹647 crore, down 18% YoY and 35% QoQ.

• Consolidated loan AUM grew 2% YoY to ₹69,610 crore but declined 12% sequentially; core loan AUM grew 4% YoY and 12% QoQ to ₹57,853 crore.

• Gross NPA at 2.2%, net NPA at 1.1%, provision coverage ratio at 128%.

• Basic EPS for Q1 FY25 was ₹7.24, down from ₹9.79 in Q4 FY24 and ₹11.18 in Q1 FY24.

Outlook and guidance

• Management expects to emerge stronger post-RBI restrictions, with full compliance and robust asset quality.

• Projected cash flows over the next three years are expected to meet all financial obligations.

• MSME and digital finance businesses are growing steadily, with branches being trained for further expansion.

• Home loan business expected to benefit from increased government support for affordable housing.

• Microfinance growth impacted by credit line squeeze and sectoral stress, but long-term prospects remain positive.