S&P Revises IIFL Finance Outlook to Positive, Affirms ‘B+/B’ Ratings

IIFL Finance Limited has informed the exchange that S&P Global Ratings has revised its outlook on the company to ‘Positive’ from ‘Stable’. The credit rating agency has affirmed the company’s ‘B+/B’ ratings. The revision is based on IIFL Finance’s recovering market share in gold loans. S&P also reaffirmed its ‘B+’ long-term foreign currency issue rating on the company’s outstanding U.S. dollar-denominated senior secured notes.

S&P Global Ratings cited the company’s strengthening market share in the gold financing business as a key factor for the outlook revision. This follows the lifting of a central bank embargo on IIFL Finance’s ability to sanction or disburse fresh gold loans. The company is expected to maintain strong levels of capitalization over the next 12 months. S&P anticipates that IIFL Finance’s portfolio pruning and reduced exposure to microfinancing will lower its credit costs, which are projected to peak in the fiscal year ending March 31, 2026.

The company has benefited from elevated gold loan prices and robust consumer demand, which, along with its extensive branch network, have contributed to a 2.2x growth in its gold loans assets under management over the 12 months leading to September 30, 2025. IIFL Finance’s market share in the gold loan segment is now second only to Muthoot Finance Ltd. among nonbank financial institutions in India. S&P forecasts that the company’s risk-adjusted capital ratio will moderately decline to 18%-19% over the next two years, compared to 20.4% as of March 31, 2025.

S&P expects IIFL Finance’s return on assets to improve to 2.3%-2.6% in fiscal years 2027 and 2028, compared to 1.9% annualized for the six months ended September 30, 2025. This improvement in profitability is expected to be driven primarily by lower credit costs. The company’s credit costs were elevated at 3.5% annualized for the first half of fiscal 2026, reflecting ongoing stress in the microfinance segment. IIFL Finance has since discontinued riskier products such as micro-ticket loans against property and unsecured digital loans to micro, small, and medium enterprises, reducing its exposure to microfinance loans.

The positive outlook on the long-term issuer credit rating reflects S&P’s view that IIFL Finance will strengthen its market share and maintain robust capitalization over the next 12 months. The company is expected to maintain its access to funding, despite market confidence sensitivities. The S&P note is available on the company’s website.

IIFL Finance Limited is a leading retail-focused diversified nonbanking financial company in India. It is engaged in the business of loans and mortgages through its subsidiaries, including IIFL Home Finance Limited and IIFL Samasta Finance Limited. The company offers a wide range of products such as home loans, gold loans, business loans, microfinance, capital market finance, and developer and construction finance to over 8 million customers through its extensive network of branches and digital channels.