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Investing.com - Jefferies has downgraded IIFL Finance Ltd (IIFL:IN) from Buy to Hold while raising its price target to INR465.00 from INR450.00, citing higher provisions and disappointing net interest margins.
The downgrade follows IIFL Finance’s first-quarter fiscal year 2026 profit after tax of Rs2.3 billion, which fell 19% year-over-year and came in below Jefferies’ estimate of Rs2.9 billion due to higher provisions.
Despite a strong rebound in gold assets under management, the company is experiencing elevated provisions in its microfinance institution business and rising stress across multiple segments, according to Jefferies.
The investment bank has cut its earnings per share estimates for fiscal years 2026 and 2027 by 12% and 7% respectively, noting that management has raised its credit cost guidance.
Jefferies believes IIFL Finance’s current valuation at 1.4 times FY1 book value should provide downside support, despite concerns that elevated provisions will weigh on growth, credit costs, and return on equity improvement.
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