IIFL Finance stock dips 6% as company slips into loss of Rs 93 cr in Q2

IIFL Finance reported a consolidated net loss of Rs 93.07 crore in the second quarter as compared to a net profit of Rs 525.52 crore a year ago

IIFL Finance shares declined 5.5 per cent on Thursday and clocked an intraday low of Rs 396.35 per share on BSE. The stock slipped after the company reported a net loss in the second quarter ended September 30, 2024.

 

At around 10:11 AM, IIFL Finance shares were down 5.55 per cent at Rs 396.5 per share. In comparison, the BSE Sensex was down 0.04 per cent at 80,051.72 at around the same time. The market capitalisation of the company at around the same time stood at Rs 16,829.65 crore. 

 

In its Q2 results, IIFL Finance reported a consolidated net loss of Rs 93.07 crore in the second quarter as compared to a net profit of Rs 525.52 crore in the July-September 2023 quarter (Q2FY24).

 

The loss was incurred as the non-banking finance company (NBFC) made a 100 per cent provision of Rs 586.5 crore for security receipts (SRs) during the quarter. These SRs were issued to the NBFC for the sale of investments in alternative investment funds (AIFs) to an asset reconstruction company (ARC).   

 

IIFL Finance income from operations for the quarter under review was flat at Rs 2,318 crore as compared to Rs 2,357 crore in Q2 FY24.

Management commentary

The past quarter was difficult for IIFL Finance due to regulatory embargo on the gold loan business, as per the filing.

 

“This past quarter has been one of our most challenging, primarily due to the regulatory embargo on our gold loan business.” Nirmal Jain, managing director of IIFL Finance, said in a statement.

 

The company has taken corrective actions that have satisfied regulatory authorities, and the embargo has now been lifted, he added.

 

“Although this quarter has seen the lowest financial performance, the worst is behind us. The company is committed to not only restoring these standards but also strengthening them moving forward,” Jain said.

 

Overall loan assets under management (AUM) shrank by 8 per cent year-on-year (Y-o-Y) to Rs 66,964 crore. Home loans grew by 21 per cent, and loan against property AUM grew by 18 per cent. 

 

Its gross non-performing assets (NPAs) increased to 2.4 per cent in Q2 FY25, up from 1.8 per cent a year ago. Net NPAs also rose to 1.06 per cent in September 2024, compared to 1.1 per cent in September 2023.

 

Microfinance remained stagnant on a Y-o-Y basis, while digital loans grew by 53 per cent Y-o-Y. Gold loans de-grew by 54 per cent Y-o-Y.

 

In the past one year, IIFL Finance shares have lost 30.2  per cent against Sensex's rise of 25 per cent.