The foreign brokerage has also raised its price target on the stock by nearly 45% to ₹550 from ₹380 earlier.
Looking ahead, the brokerage expects earnings per share (EPS) to recover, driven by a recovery in microfinance, higher system liquidity, and lower funding costs.
However, HSBC also flagged potential risks, including increased competition in gold loans, declining yields due to a reduction in unsecured lending, and rising expenses.
The brokerage has revised its earnings per share estimates for FY26 down by 6% and for FY27 up by 0.5%. It values IIFL Finance at 1.5 times its estimated book value per share for FY27.
IIFL Finance posted a consolidated net profit of ₹38 crore for the fourth quarter, down 77% from ₹165 crore in the same period last year. The year-on-year decline comes against the backdrop of regulatory challenges earlier in the financial year, including a temporary embargo on its gold loan business.
The firm’s net interest income (NII) fell 40% to ₹546.6 crore in Q4 from ₹913 crore in the same period a year ago. The drop in NII was attributed to lower income from off-book assets and a reduction in other income streams. Total income for the quarter declined by 36% to ₹546.5 crore, despite sequential recovery.
Among the six analysts that have coverage on IIFL Finance, all of them have a ‘Buy’ rating on the stock.
Shares of IIFL Finance Ltd. are currently trading 5.69% higher on Tuesday at ₹410.25. The stock is down 2% so far in 2025.
First Published: May 13, 2025 10:04 AM IST