IIFL - Fundamental Analysis: Financial Health & Valuation

Last Updated Time : 19 Sept 25, 2:16 pm

🧠 My Thought Process

You're asking for a full-spectrum fundamental analysis of IIFL Finance Ltd (IIFL), with a numeric rating and strategic investment guidance. I’ve weighed profitability, capital efficiency, valuation, and business durability, and incorporated recent market sentiment and financial updates from September 2025

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📊 Fundamental Analysis of IIFL Finance

🔍 Core Financials

Profitability

PAT Qtr: ₹133 Cr vs ₹38.4 Cr — massive jump (↑686%), but prior quarter was unusually weak.

EPS: -₹6.00 — negative trailing EPS suggests accounting adjustments or one-off losses.

ROE: 4.20%, ROCE: 6.57% — below industry norms, indicating underperformance in capital efficiency.

Leverage & Liquidity

Debt-to-equity: 3.82 — high, typical for NBFCs; manageable if asset quality holds.

Dividend Yield: 0.89% — modest, with consistent payouts.

Cash Flow & Stability

Volatile earnings, but recent PAT rebound suggests operational recovery.

DII holdings increased by 2.55%, signaling institutional confidence despite FII outflows.

📉 Valuation Indicators

Metric Value Interpretation

P/E Ratio 63.6 Extremely overvalued vs industry PE of 24.0

P/B Ratio ~2.94 High for an NBFC with modest ROE

PEG Ratio -2.11 Negative — unreliable due to EPS distortion

Intrinsic Value ~₹390–₹420 Below current price — limited upside

🏦 Business Model & Competitive Edge

Segment Focus: Gold loans, MSME finance, and affordable housing — high-growth but risk-sensitive.

Moat: Strong brand, digital lending platforms, and diversified loan book.

Growth Drivers

Rising gold prices boost collateral value, reducing default risk

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Expansion in Tier 2/3 cities and fintech partnerships.

Regulatory push for NBFC self-regulation may enhance operational autonomy.

📈 Technical & Entry Guidance

Current Price: ₹450

DMA 50/200: ₹454 / ₹434 — trading near short-term resistance.

RSI: 50.4 — neutral zone.

MACD: -5.02 — bearish crossover.

🎯 Entry Zone

Ideal Buy Range: ₹410–₹430 — wait for pullback.

Stop Loss: ₹390

Target: ₹500–₹520 in medium term

🕰️ Long-Term Holding Outlook

Hold if invested: Recovery signs and gold loan tailwinds support cautious optimism.

Buy on dips: Preferably near ₹420 zone.

Growth Triggers: Gold price rally, MSME credit demand, and regulatory clarity.

⭐ Fundamental Rating

3.7

Let me know if you'd like a peer comparison with Muthoot Finance or Manappuram next!

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