Investment Thesis

Executive Summary
IIFL Finance Ltd. operates as an integrated financial services company. It serves retail and corporate customers. The
company was formerly known as IIFL Holdings Limited and changed its name to IIFL Finance Limited in May 2019.
Target Unique Features
AUM (₹ cr)
Customers
Salaried/Self Employed Small loans for affordable homes, in small towns and suburbs of metros
21,800 Individuals Leverages underwriting and digital skills developed over time
Home

Focus on balancing prudent credit underwriting with instant in-principle

6,671 Medium, Small and
Loan against decision
Core – 87%

Micro Enterprises
Property Customer segment with informal source of income or informal property type

Medium, Small and Predominantly lending to businesses owners backed by cash flows and
2512 Micro Enterprises collateral
Digital Loan

High Yielding Granular portfolios dominated by SHGs of women for

9786 Rural Self Employed
Microfinance women
income generating activities
loans Presence across 19 states
Small ticket loans with very low delinquencies
20,733 Individuals Competitive advantage because of vast branch network and
Gold Loan segment experience
Synergistic

Developers, Lending to projects with a focus on affordable housing

3094 individuals and Lending to HNIs, corporates, trusts looking to monetize
Construction &
HNIs investments to raise capital
Capital Market
 Growth in Business Metrics over years
Loan AUM (₹ Cr) Cost of Borrowing Portfolio Yield
Net NPA
1.83%
PAT
64,638 FY23 8.80% FY23 16.60%
51,210 1608
44,688 FY 22 8.50% 1.08% FY 22 15%
0.89% 1188
34,904 37,951 0.82% FY 21 14.90%
31,228 FY 21 9.00% 0.58% 712 761
0.49% 503 FY 20 15.10%
FY 20 465
9.30%
FY19 14.10%
FY19 8.80%
12.00% 13.00% 14.00% 15.00% 16.00% 17.00%
FY18 FY19 FY 20 FY 21 FY 22 FY23 8.00% 8.50% 9.00% 9.50% FY18 FY19 FY 20 FY 21 FY 22 FY23 FY18 FY19 FY 20 FY 21 FY 22 FY23

Loan AUM grew despite Covid Marginal Increase despite 250 bp AA rating by Crisil, ICRA, CARE Exceptional Recovery since Covid Small Ticket LTPs have given great
increase in interest rate results

Growth Drivers in the future

Industry Tailwinds IIFL’s Preparedness

– Since the default by one of the biggest Infrastructure NBFC firm in

– Formidable player in the sub ₹20L loan ticket size category, Network
India (ILF&S), IIFL Finance has a massive customer segment to cater
of 386 home loan branches, consistent investments in strong
phygital infrastructure
– Potential market: ₹23.7Tn, for the smaller ticket size home loans,
facilitated by migration to urban centres, rising nuclear households
– 100% digital journey enabled through Account Aggregator, o-KYC,
e-KYC & c-KYC, OCR checks to limit the need of physical in-hand
– 64 Mn MSMEs in India with only 14% having access to credit
document
– Slew of measures by RBI intended towards fortifying the digital
– IIFL’s Asset light model enables growth via internal accruals
ecosystem, OCEN network will enable flow of credit between
borrowers, distributors and lenders
– In Gold loans segment it has a large customer base of ~54L and with
~70% repeat customers, connect with the customer is high, Digital
– Gold holdings in India: 28,000 tonnes, % holdings in form of jewelry:
innovations for other products within the group provides ability to
65% ,Organized market: 35%
drive cross-sell without putting much strain on the retail branch
– Potential Households in eligible income category for
– In the Microfinance segment, it has Grown at a 5 year CAGR of 66%
microfinance(HHs): 20.32 mn, MFI Outreach: 28.5%, thus a
built over a robust digital infrastructure for customer selection, field
considerable market share remains underpenetrated
monitoring, tracking and controls to ensure scale and asset quality
 Management

Chairman of IIFL Finance – Arun Kumar Pawar Managing Director- Nirmal Jain Joint Managing Director - R Venkataraman
IIFL Finance has a very strong leadership. Under their exceptional vision IIFL Group today has a market Cap of US $4.2Bn. Other leaders – Mr
Chandran Ratna Swami, Mr Vijay Chopra, Mr Ramakrishnan Subramanian and others at Directorial positions who have and will continue
contributing to the Growth of IIFL Finance in the years to come!

Shareholding Pattern
% share
7.31%
Promoter holding has remained the same. FII has increased from 25.57 to 28.31 and DII has increased
28.31%
24.81% Promoters From 3.41 to 7.3%.
Public Pledged shares is 0% which showcases a very a strong and confident promoter base of the company
FII Mf holdings of IIFL has been showcasing consistent increase over the years
DII
39.59%

IIFL Innovation
Digitalisation –
Gold Loans at home – Gold is collected at home; money is transferred digitally; customer can repay, top up digitally
DIY Paperless WhatsApp Loans – All documents uploaded on whatsapp; credit risk Evaluated Digitally; money disbursed and collected
digitally
Jhatpat Home Loans – 100% of disbursements are now digital as of 2023 which was only 60% until 2021

Assignment – Banks assigns its portfolio of loans to banks; Banks takes on the credit risk; IIFL gives guarantee to the bank in the form of FDs;
IIFL keeps on getting fee income from the banks; IIFLs credit risk is limited to the extent of FDs kept with the bank

Co Lending – Lending in collaboration with the banks. If banks accept the loans decided by NBFCs, 80% of loans
resides on the books of banks and 20% on the books of NBFCs. 1/3 rd. of IIFLs loan book is co lent. Aim to reach 1 lakh Crore in this Category
 IIFL Finance Peer Comparison Debt equity
Company Description Market Cap. 5yr Revenue Growth Dividend yield%
In thousand ₹ cr. Ratio
• Leading player in Financial Services
IIFL in India
Finance • Provides diverse range of loans and 23 18% 0.65% 4.11
mortgages to MSMEs, individuals
• Most diversified NBFC, oldest player
in the market 251 0.40%
• Financial solutions to retail and SME 16% 4.28

customers; infrastructure financing

• Digitalised finance products
• Involved in loans, Insurance Broking; 136 13% 0.00% 0.007
acts as a payments bank and
provides payment solutions
Other
Financial • Vehicle, home, SME, SBPL, CSEL
Services and other financial services 95 18% 0.17% 7.56
Corporations • Employee retention rate high, good
work culture
• Borrow funds from financial markets
to finance assets ,which are then 98 13.8% 1.99% 8.5
14%
5
leased out to Indian Railways

• Credit solutions for all kinds of

vehicle loans, home, gold, personal 73 1.81%
17% 3.77
and small business loans

IIFL Vision IIFL Core Values

Fairness, Integrity and Transparency - FIT is the driving force IIFL. They only
To be the most respected financial services company in India. work with people who fit into our professional ethos. They are resolute in the
- Not necessarily the largest or most profitable observance of these values and let go of any growth opportunities that deem unfit.
Risks
IIFL Finance Ltd. Faces risks ranging from credit, liquidity, operational, funding, compliance, and others. They have a
very well defined Enterprise risk management system in place and has mitigation process in place for every kind of risk.

Asset Quality – Extremely good

Collection Efficiency
Provision Coverage – Gold Loan – 100% Home Loan – 101% Business Loans – 98% Microfinance – 96%
NPA – 1.08% 133%

Despite 133% provisions, despite 2.5x the requirements of RBI the Roe has been 11% which projects an extremely
healthy picture

Capital Adequacy ratio requirement for NBFCs in India is 10% in accordance with BASEL 3 norms. However, IIFL
has a ratio of 20% which again highlights their importance on quality work and risk management efficacy

High Growth Company!

• 500+ newer branches have been opened in the last 1.5 years
• Every year the total number of employees getting hired is increasing
• Co Lending is an extremely lucrative avenue for growth; the company has already partnered with banks such as DBS,
UBS amongst others, their majority of disbursements is going to be in this segment in the years to come
• Management is conservative; this will help the company to be a long term player and sail through tougher times