At 9:44AM, shares of IIFL Finance surged 10.12% to ₹546.15 after Jefferies upgraded the stock to ‘Buy’ from ‘Hold’, with a revised target price of ₹595. The stock witnessed strong buying interest following positive commentary on the company’s growth outlook.
Jefferies’ Key Insights:
- Gold loan disbursements are expected to ramp up gradually and normalize over the next 1-2 quarters, with the gold loan book estimated to be around ₹90 billion by September 2024 due to the unwinding of the existing portfolio.
- The report acknowledges that rebuilding the gold loan portfolio to pre-ban levels will take time, as the company faces challenges such as high rundown rates and difficulty in regaining market share and customers.
- However, higher gold prices are seen as a tailwind that could support growth for IIFL Finance, with profitability expected to recover from FY25e lows and grow at a 50% CAGR over FY25-27.
- As IIFL rebuilds its gold loans, margin pressure should ease, contributing to a more robust financial performance going forward.
This upgrade and the positive outlook have led to a sharp rise in IIFL Finance shares, signaling investor confidence in the company’s growth trajectory in the coming years.
