Large Cap NBFC Stock Declares Rs 4/Share Interim Dividend: Buy?

Large-cap NBFC IIFL Finance Ltd. ended today's session with a market value of Rs 24,454.97 Cr. on the BSE. In India, IIFL Finance Ltd., along with its subsidiaries IIFL Home Finance Limited and IIFL Samasta Finance Limited, is a top diversified NBFC with a retail focus that offers loans and mortgages. With the assistance of its subsidiaries, IIFL Finance provides a comprehensive range of financial products to more than 8 million clients, including home loans, gold loans, business loans, micro finance, capital market finance, and developer and construction loans.

IIFL Finance Dividend

The Board of Directors approved "Interim Dividend of Rs. 4/- per equity share of the face value of Rs. 2/- each for the Financial Year 2023-24. Pursuant to the provisions of Regulation 42 of the SEBI Listing Regulations, the Board has fixed Thursday, January 25, 2024 as record date. The said interim dividend will be paid/dispatched on or before February 15, 2024," said IIFL Finance in a stock exchange filing.

IIFL Finance Q3 Results

The company recorded net profit after tax of Rs. 545 Cr for the quarter ended December 31, 2023, a year-on-year increase of 29%. The quarter's profit before tax (PBT) was Rs. 716 Cr, expanding 29% YoY. Core product loan growth was strong, with y-o-y AUM growth of 35% and 25% for gold and home loans, respectively. While loans against property and digital loans jumped by 27% and 96% year on year, respectively, microfinance saw a 54% growth.

Year-on-year growth in the core loan portfolio was 34%. In Q3FY24, the company's annualised ROE and ROA were 3.8% and 19.7%, respectively. Pre-provision operating profit climbed by 28% YoY to Rs. 960 Cr. for the quarter. The quarter's average borrowing costs grew to 9.07%, up 28 basis points year on year and 4 basis points QoQ. There are presently Rs 18,648 Cr in the allocated loan book. In addition, there are Rs 338 Cr worth of securitized assets. In addition, the book value of co-lending is Rs 11,586 Cr.

By December 31, 2023, the company's GNPA was 1.7%, down 36 basis points YoY, and its NNPA was 0.9%, down 20 basis points YoY. As of December 31, 2023, there was Rs 10,081 Cr in committed credit lines and cash and cash equivalents available from banks and other institutions. As of December 31, 2023, the overall CRAR2 was 19.6%, compared to the bare minimum threshold of 15%. As of Q3FY24, there were 4,681 branches nationwide, up from 4,596 branches the previous quarter.

Mr. Nirmal Jain, Founder, IIFL Finance Ltd said, "We continue to grow at a healthy pace, in all core businesses in line with our targets. Our focus on asset quality is unflinching. Our Net NPAs are now below 1%, and GNPA at lower than 2% are amongst the best in the industry. India is in a sweet spot to capitalize on reforms and growth focus of the government, favorable demographics and improved global standing. The outlook for the next five years is distinctly sanguine and we are well placed to sustain our strong growth momentum."

Mr. Kapish Jain, President & Group Chief Financial Officer, IIFL Finance Ltd., commented on the financial results by stating that "In spite of healthy CAGR growth in our asset under management of ~ 23% since fiscal 2019, we continue to strengthen our capital position with net gearing at a consolidated level touching five-year low of 3.3x. This was enabled through healthy internal accruals with expanded margins and asset light business strategy."

IIFL Finance Share Price Target

IIFL is trading in a consolidation range and appears poised for a breakout. Investors can consider entering at the current price range of INR 650 to INR 660, with a buying range slightly extended from INR 645 to INR 660. The target for IIFL is set ambitiously between INR 700 to INR 850, with a stop loss at INR 600. Holding the stock for 2 to 8 months could potentially yield considerable returns, as per the current market analysis, said VLA Ambala, a SEBI registered research analyst and co-founder, Stock Market Today.

Disclaimer

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