IIFL Finance’s stock saw a 5% jump in morning trade following an upgrade by HSBC, which raised its rating from “Hold” to “Buy” and increased its target price from ₹380 to ₹550. The brokerage’s positive outlook is driven by improving sector dynamics and stronger growth prospects for the company. As of 9:41 AM, the shares were trading 5.29% higher at Rs 408.70.
HSBC pointed to a recovery in the microfinance segment, enhanced system liquidity, and lower funding costs as key factors that could drive a significant earnings per share (EPS) recovery in the coming quarters. The brokerage now values IIFL Finance at 1.5x its FY27E book value per share (BVPS), reflecting stronger return metrics.
However, HSBC flagged some risks, including rising competition in gold loans, potentially lower yields if the unsecured loan portfolio continues to decline, and elevated operating expenses.
The brokerage adjusted its EPS estimates for IIFL Finance, lowering the FY26 estimate by 6% but increasing the FY27 estimate by 0.5%, signaling short-term adjustments followed by long-term improvement. Despite the risks, HSBC believes that macroeconomic factors and the company’s internal balance sheet stability will lead to a positive valuation rerating in the future.
Disclaimer: The information provided is for informational purposes only and should not be considered financial or investment advice. Stock market investments are subject to market risks. Always conduct your own research or consult a financial advisor before making investment decisions. Author or Business Upturn is not liable for any losses arising from the use of this information.
