IIFL - Fundamental Analysis: Financial Health & Valuation

Last Updated Time : 20 Dec 25, 11:15 pm

Fundamental Rating: 3.5

📊 Core Financials:

- Quarterly PAT at ₹211 Cr vs ₹133 Cr previously → strong growth (86.3% variation).

- ROCE at 6.57% and ROE at 4.20% → weak efficiency compared to peers.

- Debt-to-equity ratio at 4.55 → high leverage, adds financial risk.

- Dividend yield at 0% → no payouts to shareholders.

💹 Valuation Indicators:

- Current P/E: 60.5 vs Industry P/E: 21.2 → significantly overvalued.

- P/B ratio: ~3.5 (₹565 / ₹162) → moderately expensive.

- PEG ratio: -2.01 → negative, indicates unsustainable valuation relative to growth.

- Intrinsic value appears lower than CMP, suggesting premium pricing.

🏢 Business Model & Competitive Advantage:

- IIFL Finance operates in diversified financial services including loans, wealth management, and advisory.

- Competitive advantage lies in retail lending presence, diversified offerings, and strong institutional interest.

- Market cap of ₹24,042 Cr reflects mid-sized relevance in NBFC sector.

📈 Entry Zone & Long-Term Guidance:

- CMP ₹565 is above DMA 50 (₹539) and DMA 200 (₹478), showing bullish momentum.

- RSI at 51.4 and MACD positive → neutral to bullish momentum.

- Suggested entry zone: ₹520–₹550.

- Long-term holding only for aggressive investors; valuations are stretched and efficiency ratios remain weak.

Positive

• Quarterly PAT growth of 86.3% (₹133 Cr → ₹211 Cr).
• FII holdings increased by 0.15% and DII holdings by 1.04%.
• Reasonable P/B ratio (~3.5) compared to peers.
• Strong institutional interest supports growth outlook.

Limitation

• High P/E (60.5) compared to industry average (21.2).
• Weak ROCE (6.57%) and ROE (4.20%).
• High debt-to-equity ratio (4.55).
• No dividend yield (0%).
• Negative PEG ratio (-2.01) indicates unsustainable valuation.

Company Negative News

• High leverage increases financial risk.
• Valuations stretched with P/E far above industry average.

Company Positive News

• Quarterly PAT improved significantly from ₹133 Cr to ₹211 Cr.
• Institutional holdings (FII + DII) increased, showing confidence.

Industry

• NBFC sector is growing with strong demand for retail and SME credit.
• Industry P/E at 21.2 indicates moderate valuation compared to IIFL’s premium pricing.

Conclusion

⚖️ IIFL Finance shows strong profit growth and institutional support but suffers from weak return ratios, high leverage, and stretched valuations. Entry is favorable around ₹520–₹550 for speculative investors, but long-term holding requires caution due to efficiency concerns and lack of dividend payouts.