HSBC has upgraded IIFL Finance from Hold to Buy and raised the target price to ₹550 from ₹380, citing improving sector dynamics and stronger growth prospects ahead. The revised target implies a significant upside from the current market price of ₹387.90.
The brokerage highlighted that recovery in the microfinance segment, along with higher system liquidity and lower cost of funds, is expected to support a meaningful earnings per share (EPS) recovery over the coming quarters.
HSBC also values IIFL Finance at 1.5x FY27E book value per share (BVPS), reflecting improved visibility on return metrics. However, it noted certain risks to this positive outlook:
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Rising competition in gold loans
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Potentially lower yields if the unsecured loan portfolio continues to decline
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Elevated operating expenses
The brokerage revised its EPS estimates for the company, lowering FY26e by 6% but raising FY27e by 0.5%, pointing to near-term adjustments followed by a longer-term improvement trajectory.
HSBC expects IIFL Finance to benefit from macro tailwinds and internal balance sheet stability, leading to a rerating in valuations.
Disclaimer: This article is based on brokerage commentary and publicly available information. It does not constitute investment advice. Business Upturn and the author do not recommend buying or selling any stock mentioned.
