IIFL Finance - ‘Phygitally’-Driven Diversified NBFC Focused On Retail: ICICI Securities

ICICI Securities Report

IIFL Finance Ltd. has transitioned into a diversified retail-focused non-banking financial company, scaling up its consolidated assets under management to Rs 553 billion as of Sep-22 with retail constituting 94% of it post registering 18% compound annual growth rate over FY19-FY22.

Retail growth was led by aggressive branch expansion and hiring of experienced and skilled employees at the ground level. Besides, the company has also invested significantly in building digital capabilities which helps in increasing branch / employee level productivity.

Another key strategic area for IIFL Finance has been to build an asset-light business model with an off-book portfolio constituting 39% of AUM.

IIFL Finance has kept non-performing assets under control through the cycles though credit cost has been a little elevated. Product-level strategy, which improves visibility on better growth momentum, involves:

1. focus on affordable housing and non-metro locations for home loans;

2. increased physical presence and product innovation driving gold loans;

3. incremental focus on small-ticket micro, small and medium enterprise and personal digital lending;

4. growth, credit cost and opex normalisation in micro finance institution lending.

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