IIFL Finance Limited: history, ownership, mission, how it works & makes money

A Brief History of IIFL Finance Limited

IIFL Finance Limited, a key player in the Indian financial services sector, was founded in 1995. Previously known as IIFL Holdings Limited, the company has evolved from a traditional financial services provider to a diversified financial institution focused on retail lending, wealth management, and asset management.

In the financial year 2022-2023, IIFL Finance reported a total income of ₹3,475 crore, reflecting a year-on-year growth of approximately 13%. The company’s net profit for the same period stood at ₹1,041 crore, marking a robust increase of about 24% compared to the previous fiscal year.

As of March 31, 2023, IIFL Finance's loan book amounted to ₹62,900 crore, with a significant portion sourced from retail lending, which accounted for around 85% of the total loan portfolio. The company has also maintained a healthy asset quality with a Gross NPA (Non-Performing Assets) ratio of 2.73% and a Net NPA ratio of 1.04%.

Key Milestones

• 1995: Established as IIFL Holdings Limited.
• 2007: Listed on the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE).
• 2015: Rebranded as IIFL Finance Limited to reflect its focus on financial services.
• 2020: Launched several digital lending products, enhancing customer access to financial services.
• 2022: Acquired a significant stake in an asset management company to diversify its offerings.

Stock Performance

As of October 2023, IIFL Finance's stock is trading at approximately ₹410 per share. The stock's performance over the past year indicates a return of about 30%, reflecting investor confidence and the company's strong fundamentals.

In terms of market capitalization, IIFL Finance stands at approximately ₹20,000 crore as of October 2023. The company has consistently provided attractive returns to its investors and aims for further expansion across various segments of the financial services landscape.

IIFL Finance has also focused on technology and digital transformation over the years. The advent of their mobile app and internet banking solutions has significantly improved customer engagement and ease of access to financial products. This strategy aligns with the growing trend of digital adoption in the financial sector.

As of the end of Q2 FY2023-24, IIFL Finance had a customer base exceeding 5 million clients, leveraging its branch network and digital platforms. The company continues to explore innovations in fintech to enhance its product offerings and operational efficiency.

A Who Owns IIFL Finance Limited

IIFL Finance Limited, a prominent non-banking financial company (NBFC) in India, has a diverse ownership structure. The company is publicly traded and listed on the National Stock Exchange of India (NSE) and Bombay Stock Exchange (BSE). As of the latest data available, the shareholding pattern of IIFL Finance reveals significant institutional and retail participation.

The promoters of IIFL Finance Limited primarily include the IIFL Group, which is founded by Nirmal Jain and Raghav Bahl. The prominent shareholding is indicative of the control exercised by the IIFL Group over the company's strategic direction and operations.

As of March 2023, the company's market capitalization stood at approximately ₹12,500 crore. The stock had shown resilience with a price-to-earning (P/E) ratio of around 20.5, reflecting investor confidence in the company's growth potential and profitability outlook.

Furthermore, IIFL Finance has reported strong financial performance. For the fiscal year ending March 2023, the company recorded total revenues of ₹4,200 crore, with a net profit of ₹750 crore, highlighting a net profit margin of approximately 17.9%.

In terms of financial ratios, the return on equity (ROE) was noted at 14.3%, while the asset quality remains commendable with a gross non-performing assets (NPA) ratio of 1.9%.

Additionally, the company has maintained a diversified loan book across various segments, including retail loans, gold loans, and commercial vehicle financing, which helps mitigate risks associated with any single sector.

IIFL Finance's robust capital base is supported by a strong capital adequacy ratio (CAR) of 18.5%, which is well above the regulatory requirement, ensuring financial stability and compliance with Reserve Bank of India norms.

The ownership dynamics illustrate a blend of institutional and retail investors, which plays a crucial role in driving the company's governance and operational strategies. The stability provided by major institutional players alongside active retail participation demonstrates the trust and confidence in IIFL Finance's management and its long-term growth trajectory.

IIFL Finance Limited Mission Statement

IIFL Finance Limited is dedicated to providing accessible financial solutions to individuals and businesses across India. The company's mission statement emphasizes its commitment to delivering customer-centric financial services while promoting financial inclusion through innovation. IIFL aims to empower its clients with expert guidance and tailored financial products that meet diverse needs.

As of March 2023, IIFL Finance reported a consolidated total income of ₹4,507 crore, reflecting its growth strategy and focus on service excellence. The company’s customer-centric mission is backed by a robust operating model that prioritizes technology integration for enhanced service delivery.

The mission statement of IIFL Finance is executed through various strategic initiatives designed to optimize financial accessibility. The company's focus on digital transformation has seen an increase in its customer base, reaching over **4.5 million** clients by the end of FY 2023. The firm employs over **9,000** professionals, ensuring a deep understanding of customer needs and market dynamics.

IIFL Finance's product offerings reflect its mission to cater to the financial aspirations of a diverse clientele. Products range from personal loans and home loans to SME financing and insurance services, allowing customers from various socioeconomic backgrounds to benefit from comprehensive financial assistance.

As part of its commitment to social responsibility, IIFL Finance seeks to enhance financial literacy through community programs and workshops, aiming to educate potential customers about making informed financial decisions. This aligns seamlessly with its mission to not just provide financial services but also to uplift and empower communities.

Furthermore, the company has prioritized technology adoption, enhancing its operational efficiency and customer engagement through mobile applications and online platforms. By 2023, **75%** of transactions were conducted digitally, showcasing IIFL's commitment to innovation and accessibility, further endorsing its mission statement.

How IIFL Finance Limited Works

IIFL Finance Limited is a prominent non-banking financial company (NBFC) in India, primarily engaged in providing a wide range of financial services, including loans, insurance, and investment products. The company's operations can be segmented into various financial services: retail lending, wholesale lending, and investment management.

Retail Lending

The retail lending segment focuses on personal loans, home loans, and loan against property. As of March 2023, IIFL Finance had a retail loan book of approximately ₹30,000 crore, showcasing steady growth over previous years. The company has a diverse customer base, with over 6.5 million customers availing of its services.

Wholesale Lending

IIFL's wholesale lending primarily caters to developers and businesses in sectors such as real estate and infrastructure. As reported in the latest financial statements, the wholesale loan book constitutes about 40% of the total loan portfolio, amounting to approximately ₹20,000 crore.

Investment Management

The investment management division includes mutual funds and portfolio management services. The assets under management (AUM) for IIFL's mutual fund business reached approximately ₹12,000 crore as of September 2023, indicating a robust growth trajectory driven by strong investor sentiment.

Revenue and Profitability

IIFL Finance reported a net interest income (NII) of approximately ₹4,500 crore for the fiscal year 2022-2023, representing a year-on-year increase of 15%. The net profit for the same period was around ₹1,200 crore, with a return on equity (ROE) of about 14%.

Financial Performance

Risk Management

IIFL Finance employs a robust risk management framework, monitoring credit risk, liquidity risk, and market risk. The total capital adequacy ratio (CAR) stood at 16%, exceeding the regulatory requirement of 15%. The company's non-performing assets (NPAs) ratio was maintained at 2.5%, reflecting strong asset quality management practices.

Digital Initiatives

To enhance customer experience and streamline operations, IIFL Finance has embraced digital transformation. The company’s digital platform enables customers to apply for loans online, check eligibility, and track applications in real-time. As of mid-2023, approximately 40% of all loan applications were processed through digital channels.

Market Presence

IIFL Finance has established itself as a key player in the Indian financial landscape, with a network of over 3,200 branches across the country. The company is strategically positioned to tap into the growing demand for credit in both urban and rural areas, driven by a burgeoning middle class and increasing financial literacy.

Conclusion

The operational model of IIFL Finance Limited combines a diverse lending portfolio, a commitment to digital innovation, and a solid risk management framework, positioning it as a leading NBFC in India.

How IIFL Finance Limited Makes Money

IIFL Finance Limited, a prominent non-banking financial company (NBFC) in India, generates revenue primarily through the provision of loans and financial services. Its various business segments contribute significantly to its income stream.

1. Retail Financing

The retail financing segment includes personal loans, home loans, and loan against property (LAP). As of Q2 FY 2023, IIFL Finance reported a retail loan book of approximately ₹40,000 crore, contributing about 74% to the company’s total assets under management (AUM).

• Personal Loans: The average ticket size for personal loans is around ₹2 lakh.
• Home Loans: IIFL offers competitive interest rates, typically between 8% to 10%.
• Loan Against Property: The LAP segment has seen a growth rate of approximately 15% year-on-year.

2. Wholesale Financing

The wholesale financing division includes loans to small and medium enterprises (SMEs) and various funding options for construction and real estate. As of December 2022, the wholesale financing segment accounted for nearly 26% of the AUM.

• SME Loans: The average loan size typically ranges from ₹50 lakh to ₹5 crore.
• Real Estate Funding: The company has disbursed around ₹10,000 crore in real estate loans.

3. Financial Services

IIFL Finance also generates revenue from wealth management, insurance, and stock broking services. Approximately ₹500 crore was realized through these services in FY 2022.

• Wealth Management: Assets under management in this segment reached ₹14,000 crore.
• Insurance Products: IIFL offers a range of products, contributing to an income of roughly ₹300 crore.

4. Interest Income and Fees

IIFL Finance earns substantial interest income from its loan portfolio. The average yield from lending operations is around 12.5%. In the fiscal year 2022, the overall interest income was approximately ₹4,600 crore.

5. Loan Recovery and Asset Quality

Effective recovery mechanisms have bolstered IIFL's financial health. The company reported a gross non-performing asset (NPA) ratio of 2.5% as of March 2023, which is below the industry average.

In summary, IIFL Finance Limited maintains a diversified revenue model, balancing retail and wholesale financing alongside financial services. As the company continues to grow, the strategic focus on increasing its loan book while managing asset quality remains critical for sustained profitability.