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IIFL Finance Limited

IIFL Finance Limited (NSE: IIFL, BSE: 532636) is one of the leading players in the financial services space in India. Together with its subsidiaries – IIFL Home Finance Limited, IIFL Samasta Finance Limited (Formerly known as Samasta Microfinance Limited) and IIFL Open Fintech Private Limited, it provides a diverse range of loans and mortgages.

These include home loans, gold loans, business loans including loans against property and medium & small enterprise financing, micro finance, developer & construction finance and capital market finance; catering to both retail and corporate clients.

The company has a nationwide presence with a thriving network of 3,119 branches across 500+ cities.

Key Strengths

  • 1

    Diversified retail lending portfolio with extensive branch network

    Retail loans accounted for 93% of the AUM as on March 31, 2022, and had high granularity (loans of less than Rs 1 crore). Also, 69% of the portfolio, excluding gold loan business qualified under priority sector lending as on March 31, 2022. The company has four key segments: home loans (35% of the AUM as on March 31, 2022), gold loans (32%), business loans (15%) and microfinance (12%), which together accounted for 93% of the AUM, up from 67% as on March 31, 2017. These segments will continue to drive growth over the medium term.

  • 2

    Adequate capitalisation

    Consolidated networth was around Rs 6,089 crore as on December 31, 2021 (Rs 5,393 crore as on March 31, 2021). Networth coverage for net non-performing assets (NPAs) was comfortable at 12 times as on December 31, 2021 (16 times as on March 31, 2021). On-book gearing as on same date was adequate at around 5.5 times; however, ratings-adjusted gearing was higher at around 8.2 times. Nevertheless, the group has demonstrated its ability to raise capital from long-term marquee investors such as Fairfax and the CDC group. Given the growth plans and business strategy, capitalisation should remain adequate for the current scale of operations.

Key weaknesses

  • 1

    Average, albeit improving, profitability

    While ratings-adjusted return on managed assets (RoMA) improved to 1.4% for fiscal 2022 from 1.3% in fiscal 2021 (0.9% in 2020), it remains modest. Including income from DA, RoMA stood at 2.1for fiscal 2022 (1.6% for fiscal 2021). On an absolute basis, IIFL Finance (consolidated) reported net profit of Rs 1,188 crore in fiscal 2022up from Rs 761 crore in the previous fiscal and Rs 503 crore in fiscal 2020. 

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