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Systematix Research Report
IIFL Finance Ltd. reported strong performance (on expected lines) aided by strong growth in assets under management (25% YoY) and 30 basis points QoQ expansion in net interest margins.
Though the pace of growth moderated in home loan/gold loan/ business loan segments, the same was compensated by a stronger 17% QoQ growth in microfinance portfolio.
Asset quality continue to improve, with gross/ net stage III at 2.1%/ 1.1% (versus 2.4%/ 1.2% in Q2) and credit cost being stable at 1.7%.
We estimate strong 25% compound annual growth rate in IIFL's AUM to deliver 29% CAGR in earnings over FY22‐25E.
An asset-light model, coupled with operating leverage should enable IIFL's return on asset/return on equity to improve to ~4%/ 21% by FY25E from 2.7%/ 20% in FY22, respectively.
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