IIFL Finance Limited — Credit Ratings, 30-12-2024: Credit Rating

IIFL Finance Limited reported a stable credit rating of 'B+' long-term and 'B' short-term from S&P Global Ratings, reflecting improved operational resilience after the recent embargo on its gold financing business was lifted. The stable outlook indicates expectations of strengthened business volume and profitability moving forward.

The company’s financial performance has historically shown volatility linked to the embargo. However, with the lifting of this restriction in September 2024, it is anticipated that IIFL will recapture market share in the gold loan sector, leveraging its extensive branch network.

IIFL is projected to maintain its very strong capitalization, with a risk-adjusted capital (RAC) ratio expected to rise to 16%-17% over the next two fiscal years. Despite credit costs likely remaining elevated due to its focus on lower-income borrowers, profitability is forecasted to improve to a return on assets of 3.0%-3.3% by fiscal years 2026-2027.

Investor insight suggests a hold on the stock as the company's performance stabilizes and recaptures growth opportunities post-embargo, though potential risks linked to its high-risk borrower profile and funding sources must be monitored.