IIFL Finance: Motilal Oswal Sets Target Price of Rs 600

IIFL Finance Sees Significant Growth in FY26

IIFL Finance (IIFL) has reported a notable increase in its net interest income (NII) for the fourth quarter of financial year 2026 (4QFY26), growing by 31% year-over-year to approximately INR17.2 billion, in line with analyst expectations. This growth was accompanied by other income, which stood at approximately INR3.7 billion, a 14% miss compared to INR4.1 billion in the third quarter of financial year 2026 (3QFY26). Assignment income accounted for approximately INR2.1 billion, down from INR2.8 billion in the previous quarter.

The net total income (NTI) in 4QFY26 saw a significant increase of approximately 50% year-over-year to approximately INR20.9 billion, in line with expectations. Operating expenses (Opex) grew by approximately 26% year-over-year to INR9.3 billion, in line with expectations, resulting in a decline in the cost-income ratio to approximately 45%, down from 47% in the previous quarter and 53% in the previous year.

Profit before provision (PPoP) stood at INR11.6 billion, growing by approximately 76% year-over-year, in line with expectations. Post non-cash items (NCI), the profit after tax (PAT) in 4QFY26 stood at INR5.9 billion, exceeding expectations by approximately 10%. For the full financial year 2026 (FY26), the PAT (post-NCI) stood at INR16.6 billion, a significant increase from INR3.8 billion in the previous financial year (FY25).

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We have raised our earnings per share (EPS) estimate for fiscal year 2027 (FY27) by approximately 6% to factor in higher other income due to assignments and co-lending, as well as slightly higher asset under management (AUM) growth. Based on our estimates, we maintain a BUY rating on the stock with a target price of INR600, based on the sum-of-the-parts (SoTP) valuation method as of March 2028.