Brokerages have taken divergent views on IIFL Finance following its Q1 performance, with Jefferies downgrading the stock to hold and HSBC maintaining a buy rating, highlighting differing risk-reward expectations.
Jefferies has downgraded IIFL Finance to a hold rating, assigning a target price of ₹465 per share. The brokerage noted that Q1 profit after tax (PAT) came in below estimates, raising concerns about near-term performance. While gold AUM rebounded, net interest margins (NIMs) were disappointing, which affected overall profitability. Jefferies also flagged rising stress in the microfinance (MFI) and MSME segments, prompting it to cut earnings per share (EPS) estimates by 12% for FY26 and 7% for FY27.
In contrast, HSBC has retained a buy call with a higher target price of ₹550 per share. The brokerage acknowledged rising stress in unsecured MSME and micro-loan against property (LAP) segments, but pointed out that MFI credit costs are declining. It remains optimistic on the growth front, highlighting that gold loans are growing rapidly and expects overall AUM growth to accelerate going forward.
The contrasting views reflect a difference in focus: while Jefferies is cautious due to margin compression and asset quality concerns, HSBC sees upside potential supported by strong gold loan momentum and improving MFI credit dynamics.
Disclaimer: This article is based on stock research reports from Jefferies and HSBC. The views and target prices mentioned are theirs. This does not constitute a recommendation to buy or sell any stock. Please consult a registered financial advisor before making any investment decisions.