IIFL Finance margin reaches 71.68% as costs fall year on year
Revenue growth outpaced expenses, while gold loans drove sequential expansion as management said unsecured and digital lending had slowed.
Filed 15 Oct 2026, 20:37 IST · after market close · IIFL Finance Ltd (IIFL)
Key takeaways
- Consolidated Q2FY27 operating margin expanded to 71.68%, its fifth straight quarterly increase.
- Net profit rose +92.61% year on year as revenue grew +28.48% while expenses fell -9.12%.
- Gold-loan AUM increased +13% sequentially to Rs 65,729 cr, while gold-loan GNPA stood at 0.90%.
Price around the results
Consolidated earnings accelerated in Q2FY27
IIFL Finance's consolidated revenue grew +28.48% year on year and +8.35% sequentially, while operating profit increased +53.59% and +12.39%, respectively. Net profit growth was faster at +92.61% year on year and +12.88% sequentially, despite interest expense rising +38.12% year on year and +11.00% sequentially. Other income contributed only 0.16% of pre-tax profit, so it was not a material source of earnings.
Lower expenses drove the margin expansion
Operating margin widened 11.72 percentage points year on year and 2.58 percentage points sequentially because expenses declined -9.12% year on year and -0.69% sequentially while revenue increased. The tax rate was 1.81 percentage points higher sequentially and broadly stable year on year, up 0.10 percentage points, so the profit increase was not driven by a lower tax burden. Operating margin has expanded in every quarter shown since Q1FY26, from 57.09% to 71.68%.
IIFL stayed above the reported peer margin
IIFL Finance's 71.68% operating margin was 11.82 percentage points above the 59.86% median for 11 Financial Services peers that had reported the same quarter. The sequential improvement came alongside revenue growth of +8.35% and a -0.69% change in expenses, rather than faster cost growth.
Gold loans led the business update
Management said gold-loan growth is moderating overall, but gold-loan AUM rose +13% sequentially to Rs 65,729 cr and gold-loan GNPA was 0.90%. The company told analysts that home loans and secured MSME lending should gain momentum as gold-loan growth moderates; MSME AUM grew +11% sequentially to Rs 11,948 cr as the mix shifted toward secured lending. Management also said digital, personal-loan and unsecured business-loan activity had slowed, while the company opened 105 branches and added 350,000 customers in Q2FY27.
Results were filed after market close
The consolidated results were filed after market close, so there is no current market reaction to assess. Across eight prior result reactions, the stock fell six times and rose twice, with a median absolute move of 3.24%.
Q2FY27 at a glance
Consolidated figures as filed with NSE — filed ahead of third-party databases, not yet independently cross-checked.
| Line item | Q2FY27 | Q1FY27 | QoQ | YoY |
|---|---|---|---|---|
| Revenue | ₹4,246 cr | ₹3,919 cr | +8.35% | +28.48% |
| Other income | ₹2 cr | ₹3 cr | -35.53% | -56.54% |
| Expenses | ₹1,203 cr | ₹1,211 cr | -0.69% | -9.12% |
| Operating profit | ₹3,044 cr | ₹2,708 cr | +12.39% | +53.59% |
| Operating margin (%) | 71.68% | 69.10% | — | — |
| Interest | ₹1,909 cr | ₹1,719 cr | +11.00% | +38.12% |
| Depreciation | ₹63 cr | ₹63 cr | +0.73% | +33.84% |
| Profit before tax | ₹1,074 cr | ₹929 cr | +15.62% | +92.87% |
| Tax | ₹269 cr | ₹216 cr | +24.66% | +93.63% |
| Net profit | ₹805 cr | ₹713 cr | +12.88% | +92.61% |
| EPS (₹) | ₹18.00 | ₹15.87 | +13.42% | +103.16% |
Operating margin of 71.68% compares with a Financial Services sector median of 59.86% across 11 peers that have reported Q2FY27.
What management said
From the company’s own investor presentation. Each point is checked against the source document before it appears here.
This quarter
- Gold-loan AUM rose 13% QoQ to ₹65,729 crore and gold-loan GNPA was 0.90%.
- MSME AUM grew 11% QoQ to ₹11,948 crore as the company shifted toward secured lending.
- The company added 350,000 new customers in Q2FY27.
Guidance & outlook
- IIFL Finance targets approximately 25% AUM growth in FY27.
- IIFL Finance targets FY27 credit costs of 1.5-1.7%.
- IIFL Finance targets approximately 20% AUM CAGR for FY28-FY30.
- Management expects home loans and secured MSME lending to gain momentum as gold-loan growth moderates.
- Management expects to sustain resilient, capital-efficient growth through FY27.
Expansion
- IIFL Finance opened 105 new branches in Q2FY27.
New initiatives
- IIFL Finance is using AI to strengthen risk, audit, compliance and customer service.
- Finance and accounting process automation is being scaled up, with a Q4 FY27 scale-up target.
Problems & risks
- Management said gold-loan growth is moderating.
- The company said its digital, personal-loan and unsecured business-loan activity slowed given the current market outlook.
What to watch
- Whether operating margin holds above 71.68% in the next reported quarter.
- Whether gold-loan AUM growth remains above the latest +13% sequential increase while GNPA stays near 0.90%.
- Progress against management's FY27 targets of approximately 25% AUM growth and 1.5%-1.7% credit costs.