Shares of IIFL Finance declined sharply in Thursday’s session despite the company reporting a strong set of Q3 results, as investor focus shifted to regulatory and tax-related developments disclosed alongside the earnings.
IIFL Finance Q3 results at a glance
For the December quarter, IIFL Finance reported a sharp jump in profitability. The company’s consolidated profit after tax (PAT) rose to Rs 501.35 crore, compared with Rs 81.71 crore in the corresponding quarter last year, marking a 513.57% year-on-year growth. On a sequential basis, PAT increased 19.96%.
Profit after minority interest stood at Rs 464.30 crore, up from Rs 40.70 crore a year ago, translating into a 1,040.79% YoY rise, while QoQ growth was 23.38%.
On the asset quality front, the company reported an improvement. Gross NPA declined to 1.60%, compared with 2.42% YoY and 2.14% QoQ, while Net NPA improved to 0.75%, from 1.01% YoY and 1.02% QoQ.
Why did IIFL Finance shares fall despite strong earnings?
Despite the robust financial performance, the stock came under pressure due to regulatory disclosures made by the company.
IIFL Finance informed exchanges that it received a communication dated January 21, 2026, from the Income Tax Department, directing the company to get its accounts audited for a specified block period under Section 142(2A) of the Income Tax Act, 1961, with the appointment of a Special Auditor.
In addition, the GST Departments of Bihar and Gujarat have issued notices to the company, seeking additional accounting-related information.
Company’s clarification on tax and GST notices
In its disclosure, IIFL Finance clarified that the Income Tax direction has been issued in connection with ongoing assessment proceedings and is procedural in nature. The company stated that it will extend full cooperation to the authorities and added that there is no adjudication or determination against the company at this stage, and hence no financial impact can be ascertained currently.
Market participants appeared cautious following these developments, leading to selling pressure in the stock, even as the quarterly numbers reflected strong profitability and improved asset quality.
Stock performance
IIFL Finance shares declined nearly 9% in intraday trade, emerging as one of the top losers on the NSE, as investors weighed near-term regulatory overhangs against the company’s earnings momentum.
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