IIFL Q2 FY27 Earnings Call: Record PAT of Rs. 805 Cr, Reaffirms 25% AUM Growth Guidance

IIFL held its Q2 FY27 earnings call on October 15, 2026. Here's a quick read of what management said — performance, strategy, and the outlook ahead.

Record PAT, Strong AUM Growth, Stable Asset Quality

• Consolidated AUM of Rs.1,24,268 Cr — up 8% QoQ and 38% YoY in Q2 FY 2026-2027, with core businesses (gold, home, MSME, microfinance) growing 43% YoY.
• Record consolidated PAT of Rs.805 Cr — up 13% QoQ (+92% YoY per management's opening remarks); H1 FY 2026-2027 PAT stood at Rs.1,518 Cr.
• NII rose 13% QoQ to Rs.1,480 Cr — PPOP up 8% QoQ to Rs.1,355 Cr; loan loss provisions declined 5% QoQ to Rs.281 Cr.
• Asset quality stable — gross NPA fell 7 bps QoQ to 1.48%, net NPA at 0.87%, provision coverage at 91%, 90+ DPD at 1.5%.
• Capital and liquidity strong — capital adequacy at 23.5%, liquidity at Rs.13,805 Cr, shareholders' equity crossed Rs.15,432 Cr; opex-to-average-AUM improved to 3.3% from a peak of 4%.
• Standalone AUM grew 11% QoQ to Rs.70,382 Cr — gold loans 93% of standalone AUM; standalone PAT up 17% QoQ to Rs.548.5 Cr.
• Subsidiary performance — Home Finance AUM Rs.43,070 Cr (+4% QoQ, GNPA improved 8 bps to 1.38%); Samasta AUM stable at Rs.10,816 Cr (GNPA improved 46 bps to 2.82%, PAT up 13% QoQ to Rs.69 Cr).

Tonnage Growth vs. Deliberate Yield Compression

• Gold loan tonnage improved to 69t from 64t — new branches added in Q1 and Q2 FY 2026-2027 are supporting tonnage growth and market share recovery; auction rate rose only ~60-90 bps from near-zero levels.
• MSME yields fell 0.98% QoQ and home loan yields fell 11 bps QoQ — Nirmal Jain framed this as a strategic shift to higher-quality borrowers (micro LAP yields moving from 18-24% to 12.5-13.5% on new business), acknowledging credit costs will not decline proportionately.
• 40% of gold loans are co-lended — the retained 60% broadly yields upwards of 20%; management confirmed yield dilution from the co-lending strategy.
• Capital adequacy, not distribution, drives co-lending — management explicitly stated inadequate capital adequacy in FY 2026-2027 is the primary driver of the extensive gold loan co-lending program.
• Gold NPAs rose ~30 bps QoQ — ~7% of the book in the 1-30 DPD bucket; management guided that a 10% gold price correction could push NPAs to 1-3%, though ultimate losses are expected to be minimal given LTV of ~85% for the 90+ DPD cohort.
• ~20-25% of gold loans are income-generating — process started in Q1 FY 2026-2027, using civil, bank, and GST data for income triangulation; share expected to increase.

Affordable Housing Push, MFI Re-acceleration, Insurance Revenue at Risk

• H1 FY 2026-2027 home loan disbursement grew 64% YoY — affordable housing doubled sequentially to Rs.790 Cr in Q2 FY 2026-2027 (from Rs.400 Cr in Q1); branch network reached 350, with all 38 new branches in affordable segments.
• Housing incremental yield on disbursements improved to 11.81% — vs. 11% in Q1 FY 2026-2027 and 10.69% in Q2 FY 2025-2026; overall portfolio yield (10.4% in Q2) is temporarily depressed by a ~Rs.600 Cr high-yield/high-loss portfolio running off, with improvement expected over the next 2-3 quarters (by H1 FY 2027-2028).
• MFI disbursement run rate building — September FY 2026-2027 at ~Rs.550 Cr/month, October guided at ~Rs.800 Cr, exit run rate by Feb/Mar FY 2026-2027 targeted at ~Rs.1,000 Cr/month; H1 growth was muted due to a cautious stance in drought-affected geographies.
• Insurance cross-sell revenue of ~Rs.250-260 Cr in H1 FY 2026-2027 — straight to PBT (Home Finance ~Rs.160 Cr, Samasta ~Rs.75-80 Cr); exposed to the IRDAI draft on insurance commissions effective FY 2027-2028.
• IRDAI draft impact quantified — group's FY 2025-2026 commission was ~Rs.240 Cr (~10% of PBT); concentrated in HFC (Rs.160 Cr, 4-5% of its revenue) and Samasta (Rs.78 Cr, commission rate dropping from ~14% to 2.5-5%), with IIFL standalone largely unaffected.
• Home loans never conditional on insurance — management clarified cross-sell is never forced; Nirmal Jain expects the regulator to moderate draft insurance norms towards a middle path, citing industry resistance and job loss concerns.

QIP or Strategic Investor, Off-Book Engine, Bond Market Access

• Capital raise targeted for closure in Q3 FY 2026-2027 — for the standalone entity via QIP or strategic investor, with dilution of 10-20%; fundraise is required at the listed holding company (IIFL), not the subsidiaries.
• No current plan for divestment, IPO, or sale of Home Finance or Samasta — though selling a stake in a subsidiary to raise parent capital remains an option under evaluation; Nirmal Jain expects to unlock capital from subsidiaries (demerger/divestment) within 6-7 quarters (approx. FY 2027-2028 / FY 2028-2029).
• $800 million raised via international bonds in H1 FY 2026-2027 — including a $300 million social bond in Q2; the company also issued tokenized bonds for the first time, and Fitch upgraded the rating to BB-.
• Off-book AUM at Rs.42,796 Cr (34% of consolidated AUM) — 18 active bank partners; cumulative loan origination via assignment or co-lending crossed Rs.1.7 lakh crore over the past 10 years; off-book income fell QoQ despite higher off-book AUM, due to co-lending's lack of upfront income and amortization of older DA assignment income.
• Equity raise trade-off acknowledged — management emphasized equity is important for credit rating upgrades and lowering cost of funds, but an equity raise may temporarily dampen ROE; analyst Yash Dantewadia flagged concern over raise valuation, urging a strong price-to-book given current ROE/ROA.

AI Deployment Lifts Productivity and Collections

• 30% productivity improvement in AI-implemented processes — spanning audit and collection functions.
• AI tools aiding microfinance collections — particularly in the 1-90 and 90+ day buckets, by providing field officers with actionable insights.
• AI used for lead generation — among existing customers for renewal and add-on loans.

FY27 Guidance Reaffirmed; Growth vs. Discipline Balance

• FY 2026-2027 guidance reaffirmed — Nirmal Jain reaffirmed 25% AUM growth, similar profit growth, and 20% ROE for FY27, expressing confidence in meeting or exceeding targets despite analyst queries on dilution impact.
• ROA trajectory — management guided ROA for FY 2026-2027 will be roughly break-even, with a target of 2.5-3% across all businesses for FY 2027-2028.
• Home finance guidance — AUM growth of 18-20% for FY 2026-2027; Girish Kousgi reported Q2 disbursement growth of 64% YoY and 41% QoQ, expecting H2 FY 2026-2027 to show accelerated core home loan growth; ROE for home finance guided at 16-18% for FY 2027-2028.
• Consolidated ROE above 20% — guided for the medium-to-long term, with the caveat that an equity raise may temporarily dampen it.
• Gold loan momentum conditional — growth expected to be sustained in H2 FY 2026-2027 provided gold prices remain stable (±10%) and economic conditions hold.
• Macro risks flagged — management cited global uncertainty and tight funding conditions as key risks to the supportive retail credit backdrop in India, guiding disciplined growth with strict asset quality and liquidity control; the company has not capitalized on the auto sales upcycle, as motor finance requires long-term infrastructure build-out rather than a seasonal entry.
• Tax overhang unchanged — no update beyond the previously disclosed assessment order and tax demand at parent/subsidiary level, for which a stay has been obtained.