IIFL Finance Q2 net profit doubles to ₹766 crore YoY

IIFL Finance Limited (NSE: IIFL)

reported Q2 consolidated net profit of ₹766 crore, double the ₹376 crore a year ago. The street expected ₹735 crore, so the print beat by about 4.2%. What happened: Consolidated revenue rose 28.7% YoY to ₹4,246 crore from ₹3,300 crore. Gross NPA fell 7 bps QoQ to 1.48% from 1.55%. Net NPA rose 5 bps QoQ to 0.87% from 0.82%. Why it matters: Profit grew about 3.6 times as fast as revenue. That usually means costs and provisions grew slower than income. The input has no cost break-up, so this is my inference, not a reported figure. My view: The asset quality signals point in two directions. Gross NPA is bad loans before provisions. Net NPA is what remains after provisions. Gross falling while net rises can mean provision cover on the stressed book thinned a little. At 5 bps, I would not call it a trend after one quarter. What I do like is that the beat came with 28.7% revenue growth, so it is backed by the top line and not just lower costs. What I am watching next: Gross NPA staying below 1.50%. Whether net NPA rises again next quarter. Credit cost trends in microfinance and mortgage loans. Capital adequacy staying above the regulatory minimum. Please note that the information shared is intended solely for informational purposes and does not make any investment recommendations.