IIFL

Balances Risk with Branch Expansion and Diversification

is taking a conservative stance on gold loan expansion in FY27, despite strong recent growth, as founder Nirmal Jain flagged risks from evolving regulations and volatile gold prices. Gold loans remain the largest growth driver, with the book doubling YoY to ₹43,432 crore, but management is mindful of regulatory scrutiny following RBI’s temporary restrictions in 2024. The company is preparing for new gold loan regulations effective April 1, investing in technology and AI-led monitoring, while raising funds via a public bond issue. Gold Loan Business - Standalone loan book: Expanded from ₹27,508 crore (FY25-end) to ₹49,000+ crore (Dec 2025). - Gold loan book: ₹43,432 crore, doubled YoY. - Quarterly growth: ₹5,000–6,000 crore, driven by gold price surge. - Long-term growth target: 20–25% annually, but near-term expansion to be calibrated. Funding & Borrowings - Public issue of secured NCDs: Up to ₹2,000 crore, with 75% for debt repayment and 25% for lending/general purposes. - Net borrowing requirement: ₹9,000–10,000 crore in FY27, assuming 20–25% loan growth. - ECBs/foreign currency debt: Targeting 20% of borrowings in FY27, up from 12–13% currently. Margins & Risk Management - NIMs: Expected at 6.5–7% in FY27, supported by scale efficiencies. - Investments in AI-led monitoring and digital cash-flow assessment to manage compliance costs. Diversification & Opportunities - RBI approval for 500 new branches to deepen reach. - Structured credit and private credit expected to see strong deal flow in FY27, as banks turn conservative. - Management sees opportunities in specialized lending and risk-capital funding. Valuation & Outlook - Strategy: Balance growth with regulatory compliance and risk management. - Outlook: Moderate gold loan expansion, strong branch rollout, and diversification into structured/private credit. - Rating stance: Cautious optimism, with focus on sustainable growth and margin protection.