IIFL Finance Q3 Results: Stock tanks 15% despite sharp surge in Gold loans; Here’s why

Shares of IIFL Finance fell as much as 15% on Thursday, January 22, after the company announced, along with its quarterly results that it has received a communication from the Income Tax department.

The communication pertains to the I-T department directing the company to get its accounts audited for a specified block period under Section 142 (2A) of the Income Tax Act, 1961, and appointing a special auditor for this purpose.

“The said direction has been issued in connection with ongoing assessment proceedings and is procedural in nature. There is no adjudication or determination against the Company under the said communication, and at this stage no financial impact can be ascertained,” IIFL Finance said in its filing.

For the December quarter, IIFL Finance reported a 189% year-on-year surge in its gold loans, which were also higher by 26% on a sequential basis.

Net profit for the period stood at ₹484 crore from ₹41 crore last crore, while revenue for the quarter increased by 40% year-on-year to ₹3,427.5 crore.

Net Interest Income (NII) at the end of the quarter grew by 28% to ₹1,582 crore from ₹1,235 crore. NII increased by 10% sequentially.

Asset quality improved in the December quarter with Gross NPA improving by 54 basis points sequentially to 1.6%, while Net NPA improving 27 basis points to 0.8%.

For the quarter, Assets Under Management (AUM) for the home loan business grew 5% from last year to ₹31,893 crore, but remained flat sequentially.

MSME Loans AUM was up 17% from last year and 4% sequentially to ₹10,081 crore due to strategic re-calibration towards low risk secured lending and pullback from unsecured lending.

Microfinance AUM declined by 19% from last year to ₹8,360 crore and was flat from the September quarter due to pressures in the unsecured lending segment.

Shares of IIFL Finance are now trading 15% lower after the announcement at ₹529.45. The stock at the start of today’s session, traded close to its 52-week high of ₹675. The stock will also be exiting the Futures & Options (F&O) segment at the end of the January series, which means Tuesday, January 27, will be the last day for the stock in the F&O segment.