Buy IIFL Finance; target of Rs 800: Motilal Oswal

Motilal Oswal's research report on IIFL Finance

IIFL’s 3QFY24 PAT (post-NCI) grew 30% YoY/3% QoQ to ~INR4.9b, while its 9MFY24 PAT increased by ~28% YoY to INR13.9b. 3QFY24 RoA/RoE stood at 3.8%/19.7%. NII grew 45% YoY to ~INR15.7b. Non-interest income stood at INR1.1b (down ~40% QoQ/~55% YoY) due to lower assignment and fee income. PPoP stood at INR9.6b, up ~25% YoY. Credit costs declined to ~2.1% (PQ and PY: 2.4%), which included ~INR400m provisions on investments in AIF. IIFL has also taken a charge of ~INR1.6b (impact of the RBI AIF circular) on the capital of its HFC subsidiary.

Outlook

The stock trades at 1.9x FY25E P/BV and ~10x P/E for a PAT CAGR of ~27% over FY23-FY26E. IIFL can see further re-rating as investors get more confidence in its core retail business. We have a BUY rating on the stock and a TP of INR800 (based on SOTP valuation; refer table below).

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