IIFL Finance (IIFL)

FairStock Score: 60/100 — STEADY

Score breakdown: P/E: 2/3 · ROCE: 0/2 · Growth: 2/2 · Dividend: 0/1

Key Financials

Strengths

• Latest quarter sales of ₹3,427 Cr and net profit of ₹501 Cr show earnings momentum; profit growth is 135.38% and sales growth is 17.22%.
• Piotroski F-Score of 7/9 indicates improving fundamental health across profitability, leverage, and efficiency.
• Price-to-book of 1.44 and P/E of 16.47 are not excessive if the earnings recovery is sustained; book value stands at ₹291.86.
• Graham Number of ₹445.77 is above the current price of ₹420.15, offering a modest value reference.
• Dividend yield of 0.81% provides a small income cushion while the turnaround is tested.

Concerns

• Debt-to-equity of 4.15 is very high for an NBFC, amplifying earnings and asset-quality risks.
• Free cash flow is -₹5,930 Cr, meaning the business is consuming rather than generating cash.
• Altman Z-Score of 0.91 signals financial stress risk, and the negative margin of safety of -11.31% leaves little room for error.
• Promoter holding at 24.85% is low; a high-return business with this leverage needs more owner skin in the game.

AI Analysis

Looking at IIFL Finance, I see a leveraged lender trading at ₹420.15, or roughly 1.44 times book value of ₹291.86. That is not a screaming bargain. The P/E of 16.47 and the stated PEG of 6.71 tell me the 135.38% profit growth is not being valued as durable; it looks more like a rebound than a repeatable franchise. Sales grew 17.22%, which is respectable, but ROE is only 10.33% and ROCE is 8.81%. For a company with debt-to-equity of 4.15, those returns are ordinary at best. That leverage frightens me. A lender borrowing four times its equity must earn far more to justify the risk. Free cash flow is deeply negative at ₹-5,930 Cr, so the business is consuming cash and borrowing further to keep growing. The Altman Z-Score of 0.91 is in the danger zone, though I know this ratio is less suited to financial firms. Still, I cannot ignore it. The Piotroski F-Score of 7/9 is decent and the latest quarter shows net profit of ₹501 Cr on sales of ₹3,427 Cr, so there is near-term momentum. But promoter holding of just 24.85% gives me pause; I want owners who eat their own cooking. The Graham Number is ₹445.77, above the current price, yet the margin of safety is given as -11.31%, so there is no serious cushion. At 52-week low of ₹409.10 and down from ₹675, this may be a turnaround in progress, but I would not confuse recovery with quality. In investing, you get paid not for activity but for patience. I will wait until the balance sheet proves it can generate cash without excessive leverage.

Data from BSE/NSE filings. AI analysis is for educational purposes only — not investment advice. Scoring methodology · Disclaimer