💰 Financial Performance

Revenue Growth by Segment

Consolidated Total Income grew 24% YoY to INR 3,540.6 Cr in H1FY26 from INR 2,866.2 Cr. Interest Income rose 17% YoY to INR 4,712.2 Cr, while Non-fund based income surged 76% YoY to INR 1,499.1 Cr, driven by a 33% growth in the assigned book (INR 18,607 Cr) and a 40% increase in co-lending (INR 11,848 Cr).

Geographic Revenue Split

The AUM is diversified across India: Gujarat (16%), Maharashtra (13%), Karnataka (8%), Rajasthan (7%), West Bengal (7%), Telangana (7%), Uttar Pradesh (6%), Delhi (5%), Haryana (4%), and Tamil Nadu (4%). This distribution mitigates regional economic downturns, though 20% of AUM remains exposed to high-risk areas like West Bengal and Uttar Pradesh due to upcoming elections and floods.

Profitability Margins

Consolidated PAT for H1FY26 stood at INR 692.1 Cr, a 182% increase from INR 245.1 Cr in H1FY25, following recovery from one-off AIF provisioning. Return on Assets (ROA) stood at 1.9% in H1FY26, with management targeting 2.5% for the full year. Return on Equity (ROE) was 9.8% for H1FY26.

EBITDA Margin

Pre-provision operating profit (PPOP) grew 35% YoY to INR 1,868.6 Cr in H1FY26. Core Profit Before Tax (PBT) for the standalone entity was INR 532.2 Cr in Q2FY26. The interest spread improved to 9.2% in Q2FY26 from 8.2% in FY25, driven by a reduction in the quarterly average cost of borrowing by 7% QoQ.

Capital Expenditure

IIFL raised INR 1,272 Cr through a rights issue in May 2024. The company has planned a further issuance of Non-Convertible Debentures (NCDs) up to INR 10,000 Cr, with terms to be finalized in December 2025 to support AUM growth and liquidity buffers.

Credit Rating & Borrowing

Infomerics assigned/reaffirmed 'IVR AA/Stable' for Perpetual Debt and 'IVR A1+' for Commercial Paper. Fitch Ratings affirmed 'B+' with a 'Positive' outlook. The average Cost of Funds (COF) was 9.4% in Q2FY26, down from 9.9% in FY25, reflecting improved market confidence post-RBI embargo lifting.

⚙️ Operational Drivers

Raw Materials

The primary 'raw material' is capital, with the funding mix comprising Bank/NBFC borrowings (40%), Capital Market instruments (32%), Securitization/Co-lending (17%), and Refinance facilities (11%).

Import Sources

Funds are sourced domestically from Indian banks, NBFCs, and institutional investors, as well as international strategic investors like Fairfax (15.2% stake) and Capital Group (7.9% stake).

Key Suppliers

Key financial backers and strategic investors include Fairfax, Capital Group, Bank Muscat India Fund, Theleme, Vanguard, HSBC MF, Abakkus, and BlackRock.

Capacity Expansion

Current physical capacity includes 4,872 branches as of September 30, 2025, up from 4,780 in previous quarters. The company leverages a 'phygital' model to serve 4.6 million active customers.

Raw Material Costs

Interest expense, the cost of capital, rose 33% YoY to INR 2,670.7 Cr in H1FY26 due to higher borrowing volumes to support a 35% YoY growth in AUM (INR 90,122 Cr).

Manufacturing Efficiency

Operational efficiency is measured by the Cost-to-Income ratio, which improved to 45.2% in Q2FY26, down 5.9% QoQ, as revenue growth outpaced branch expansion costs.

Logistics & Distribution

Distribution is handled via 4,872 branches and digital channels. Operating expenses as a percentage of Average AUM for the Home Finance subsidiary stood at 2.9% in H1FY26.

📈 Strategic Growth

Expected Growth Rate

35%

Growth Strategy

Growth will be driven by a focus on collateral-backed retail lending (Gold, MSME Secured, and Home Finance) while discontinuing high-risk segments like Micro LAP and personal loans. The company is utilizing an asset-light co-lending model (40% YoY growth) and expanding its phygital reach to 4,872 branches to penetrate underserved markets.

Products & Services

Home loans, Gold loans, MSME loans (Secured), Microfinance (MFI), Developer & Construction finance, and Capital Market finance.

Brand Portfolio

IIFL Finance, IIFL Home Finance, IIFL Samasta Finance.

New Products/Services

Focusing on 'Mortgages' (Home Loans and LAP) and Gold loans as core growth pillars post-consolidation, with Home Finance AUM reaching INR 40,023 Cr (up from INR 35,499 Cr in FY24).

Market Expansion

Deepening penetration in existing 4,872 branches across India, specifically targeting retail and MSME segments in Tier 2 and Tier 3 cities.

Market Share & Ranking

IIFL is a leading retail-focused NBFC in India, particularly strong in the gold loan and affordable housing finance segments.

Strategic Alliances

Extensive co-lending arrangements with banks, with the co-lending book growing 40% YoY to INR 11,848 Cr.

🌍 External Factors

Industry Trends

The NBFC industry is shifting toward asset-light co-lending models and digital-first 'phygital' delivery. IIFL's co-lending book grew 40% YoY, positioning it well for this trend.

Competitive Landscape

Competes with other diversified NBFCs and specialized gold/housing finance companies; maintains edge through diversified product mix and strategic institutional shareholding.

Competitive Moat

Moat is built on a massive physical network (4,872 branches), a large customer base (4.6M+), and backing from marquee global investors (Fairfax, Capital Group), providing financial flexibility and lower borrowing costs compared to smaller NBFCs.

Macro Economic Sensitivity

Highly sensitive to RBI repo rate changes, which impact the 9.4% cost of borrowing and the 9.2% interest spread.

Consumer Behavior

Shift toward formal credit in rural/semi-urban areas for gold and housing loans, supporting IIFL's 35% YoY AUM growth.

Geopolitical Risks

Minimal direct impact, but domestic political risks like the Karnataka MFI ordinance and state elections in West Bengal/UP impact collection efficiencies.

⚖️ Regulatory & Governance

Industry Regulations

Subject to RBI regulations for Systemically Important NBFCs. Impacted by the RBI circular on AIF investments (Dec 2023) requiring 100% provisioning for exposures not liquidated in 30 days, and the Karnataka microfinance ordinance (Feb 2025) curbing recovery practices.

Environmental Compliance

Not disclosed as a significant cost driver for this financial services firm.

Taxation Policy Impact

Effective tax rate is approximately 25%, with PBT of INR 913 Cr resulting in PAT (pre-NCI) of INR 692.1 Cr in H1FY26.

Legal Contingencies

The company absorbed a one-off exceptional provisioning of INR 586.5 Cr in FY25 related to Security Receipts from AIF investments to comply with RBI mandates.

⚠️ Risk Analysis

Key Uncertainties

Asset quality in the MFI segment remains a concern due to regional disruptions; GNPA stood at 2.1% in Q2FY26. Future profitability is contingent on sustaining collection efficiency in MFI.

Geographic Concentration Risk

20% of AUM is concentrated in West Bengal, Uttar Pradesh, and flood-prone Northern India, posing a risk to collection efficiency during elections or natural disasters.

Third Party Dependencies

17% of the resource profile depends on securitization and co-lending arrangements with third-party banks.

Technology Obsolescence Risk

Mitigated by ongoing investments in AI-led risk systems and a robust digital phygital model.

Credit & Counterparty Risk

Gross NPA was 2.1% and Net NPA was 1.0% as of September 30, 2025. Capital adequacy (CRAR) remains strong at 28.2% (Consolidated), well above the 15% regulatory requirement.