Shares of IIFL Finance Ltd continued their downward slide for the second straight session, falling 5.48% to ₹451.75 on Thursday, August 1. This comes on the heels of a 5% drop on Wednesday after the company reported weaker-than-expected earnings for the June quarter. The two-day decline amounts to an 11% erosion in investor wealth.
The company reported a 19% year-on-year decline in net profit for the first quarter of FY26 at ₹233.4 crore, compared to ₹288 crore a year earlier. While revenue from operations grew 12.7% to ₹2,952.8 crore, the net interest margins (NIMs) disappointed analysts, especially given rising stress in microfinance (MFI) and MSME segments.
Brokerage downgrades further dampened sentiment. Jefferies downgraded IIFL Finance to “Hold” from “Buy” and cut its target price to ₹465 per share. It cited Q1 PAT coming in below estimates, margin pressure, and rising stress in the unsecured MSME and MFI portfolios. The brokerage also slashed its earnings per share (EPS) estimates for FY26 and FY27 by 12% and 7%, respectively.
Meanwhile, HSBC maintained a “Buy” rating with a target price of ₹550, but also flagged concerns. It noted that while gold loan growth remains robust and microfinance credit costs are declining, pressure is rising in the unsecured MSME and Micro-LAP (Loan Against Property) segments.
Adding to the uncertainty, IIFL Finance announced a set of senior leadership changes, including the re-designation of Mayank Sharma as Chief AI & Innovation Officer and part of the senior management team. Although such structural shifts could be seen as long-term positives, they come amid investor concerns over near-term earnings softness.
The dual hit of disappointing quarterly performance and cautious brokerage commentary has clearly weighed on investor confidence, pushing the stock lower over the past two sessions.
Disclaimer: This article is for informational purposes only and does not constitute investment advice. Investors are advised to do their own research or consult a professional advisor before making any financial decisions.