IIFL Finance Ltd

Rating Action Details

• Bank loan facilities rated AA/Stable by Crisil (₹11,493 crore).
• Non-convertible debentures rated AA/Stable (₹11,398.56 crore).
• Long-term Principal Protected Market Linked Debentures rated AA/Stable (₹859 crore).
• Perpetual bonds rated AA-/Stable (₹300 crore).
• Commercial Papers rated A1+ (₹9,000 crore).
• Outlook: Stable for all ratings.
• Rationale: reaffirmation; no detailed rationale provided.
• Material changes since last rating: none disclosed.
• Rating Agency: Crisil Ratings Limited.

Tax assessments and stays

• IIFL Home Finance Limited: Aug 24, 2026 block assessment order; tax demand under section 158BC(1)(c).
• IIFL Finance Limited: stay of recovery on ₹23.78 crore until Dec 31, 2026 or appeal disposal; 5% payable.
• First installment of ₹5 crore paid on Aug 13, 2026; compliance steps underway.
• IIFL Home Finance Limited: ₹963.39 crore demand; company contesting ORC, deduction, ESOP-related additions.
• Block period for Home Finance: Apr 1, 2018 to Feb 3, 2025; IT Authority is Central Circle-4(4), Mumbai.
• Overall: no material impact on operations anticipated; matter remains under appellate/rectification channels.

Rating action

• Infomerics reaffirms IVR AA/Stable for PDI Rs 850 crore.
• IVR A1+ for proposed CP Rs 5,000 crore.
• IVR AA/Stable for proposed PDIs Rs 300 crore.
• Rating agency: Infomerics Valuation and Rating Limited.

Rating action and instruments

• NCDs: Rs 3,022.04 crore rated AA+/Stable.
• PDI: Rs 850 crore rated AA/Stable.
• Proposed PDI: Rs 300 crore rated AA/Stable.

Rating Agency

• Agency: Brickwork Ratings India Private Limited (BWR).

Rationale

• Reaffirmation; no explicit rationale provided in filing.

Outlook

• Outlook: Stable for all ratings.

Material changes since last rating

• No material changes disclosed since last rating.

IR activity

• Organized Analyst/Institutional Investor Meetings; Q1 FY27 Debt Investor Presentation published online.

Rating Action

• Fitch upgrades Long-Term IDR to BB- from B+, with Stable Outlook.
• Senior Secured Debt upgraded to BB- from B+; GNMP upgraded to BB- from B+.
• Recovery Rating on Senior Secured Debt withdrawn.
• Material change: IDR and debt upgraded; Recovery Rating withdrawn.
• Rating Agency: Fitch Ratings.

Meeting Details

• Date: August 19, 2026; Event: Debt Investor Call (Group Meeting) organized by IIFL Finance Limited.

Rating actions

• India Ratings assigned IND AA/Stable to IIFL Finance's Subordinated Debt of Rs 5,000 million.
• Affirms bank loan facilities worth Rs 50,000 million at IND AA/Stable.
• Affirms non-convertible debentures (NCD) of Rs 47,500 million, down from Rs 52,500 million, at IND AA/Stable.
• Affirms perpetual debt (Tier I) of Rs 3,000 million at IND AA-/Stable.
• Outlook is Stable for all ratings.

Financial Performance

• Q1 FY27 PAT after tax before NCI: INR 713 crores, up 14% QoQ.
• PPO: INR 1,252 crores, up 50% YoY, 7% QoQ.
• Consolidated loan AUM: INR 1,15,523 crores, up 38% YoY, 7% QoQ.
• Gold loan AUM: INR 58,406 crores.
• Core loan AUM (home, gold, MSME, microfinance) INR 1,11,717 crores, up 43% YoY, 8% QoQ.
• NPA gross 1.6%, net 0.8%; provision coverage 94%.
• Assigned loan book INR 26,118 crores; up 73% YoY, 10% QoQ.
• Co-lending assets INR 14,647 crores; up 27% YoY, 20% QoQ.
• Cost of borrowing 9.13% QoQ; down 33 bps YoY.
• Liquidity: INR 17,183 crores term loans/bonds; INR 5,283 crores direct assignment.
• Cash lines and committed credit INR 7,148 crores; ALM positive; net gearing 4.0x.
• ROE 19.5%; ROA 3.1%; Basic EPS 15.9.
• Capital adequacy: NBFC 17.1%; HFC 41.7%; Samasta 24.9%; all above 15%.
• Moody's upgraded rating to Ba3; GMTN Ba3; outlook stable.
• USD 500 million social bond proceeds directed to women, low-income, rural borrowers.
• CRISIL ESG rating 66; Core ESG 69.

Operating Update

• Gold loan is main growth engine; book is nearly 90% secured.
• Home Finance and Microfinance slower in Q1 but on track.
• Co-lending with 15 active bank partners; momentum gathering.
• AI-driven operating model moving from pilot to measurable impact.
• Board approved enabling resolution for fresh equity; subject to AGM.
• 500 new branches planned; total branch network 4,500-5,000.
• Home Finance disbursement up 39% sequential; AUM up 4%; book 7%.
• LAP share about 18-19% of home portfolio.
• FY27 full-year guidance: book growth 17-18%, disbursement growth over 30%.

Capital and Funding

• Enabling equity resolution; shareholders' AGM in two days.
• Options include QIP, secondary sale, co-lending, perpetual and subordinated debt.
• Perpetual counted as Tier 1; subordinated as Tier 2.
• Capital adequacy per entity: NBFC 17.1%, HFC 41.7%, Samasta 24.9%.
• USD 500m social bond proceeds used for income-generating lending.
• Moody's upgraded to Ba3; Fitch upgrade expected after results.
• Data book available on company website.

Guidance and Outlook

• FY27 credit cost guidance: 1.5% to 1.7%.
• Gold loan yields rose; margins stable; no material margin pressure.
• Cost of funds to ease after FCNR; costs expected to decline.
• ROA target uplift of about 40-50 bps post-tax; 60-70 bps pre-tax.
• 3-4 year horizon for ROE to mid-teens.
• 500 new branches this year to boost scale.
• Co-lending momentum to ease capital needs.
• Samasta ROA target 2.5-3%; microfinance remains a focus.

Q&A Highlights

• CET1 at 12.24%; questions on equity-raise timing.
• Options include QIP, secondary sale, or microfinance listing; not urgent.
• Home Finance disbursement growth 39% QoQ; AUM growth 4%; book 7%.
• FY27 guidance reiterated; disbursement growth over 30%.
• Gold loan framework: income-generating product; LTV rules; banks aligned.

Risks and Watchpoints

• Gold price volatility remains tail risk; LTV discipline maintained.
• Capital adequacy at parent remains edge; approvals needed to raise equity.
• RBI gold loan framework differences; banks' policies vary; co-lending alignment.
• Stand-alone SR redemptions expected by Sep 2027; some uncertainty.

Rating details

• Agency: Crisil Ratings Limited reaffirmed all ratings for IIFL Home Finance Limited.
• Long-term bank loans rated AA/Stable; short-term bank loans rated A1+.
• PPMLD long-term ratings reaffirmed AA/Stable for Principal Protected Market Linked Debentures and for PPMLD Non-Convertible Subordinated Debentures.
• Non-Convertible Debentures rated AA/Stable; Commercial Paper rated A1+.
• Outlook maintained as Stable for all ratings.