IIFL Finance Q4FY26: Motilal Oswal sets ₹600 TP

What the brokerage call says

Motilal Oswal turned bullish on IIFL Finance (IIFL) and reiterated a Buy rating with a target price of ₹600, according to its research report dated April 30, 2026. The brokerage note followed the company’s 4QFY26 performance, where several core operating metrics were described as broadly in line with estimates, while profit came in above expectations.

The report’s key message is that earnings momentum has improved, supported by operating leverage and lower credit costs. Motilal Oswal also said it has raised its FY27 EPS assumptions to reflect higher other income linked to assignments and co-lending, along with slightly higher AUM growth.

Q4FY26 net interest income and total income

In 4QFY26, IIFL’s net interest income (NII) rose 31% year-on-year to about ₹1,720 crore. Motilal Oswal said this was in line with its expectations.

Net total income (NTI) grew about 50% YoY to roughly ₹2,090 crore, also described as in line. The faster growth in NTI compared with NII reflects the role of non-interest income, even as the quarter saw a miss on other income versus the brokerage’s estimates.

Other income: miss versus expectations

Other income in 4QFY26 was around ₹370 crore, a 14% miss versus Motilal Oswal’s expectations. It also declined from ₹410 crore in 3QFY26.

The report noted that this included assignment income of roughly ₹210 crore, down sequentially from ₹280 crore in the previous quarter. The sequential drop in assignment income is important because the brokerage explicitly links its FY27 assumptions to assignments and co-lending.

Operating costs and cost-to-income trend

Operating expenses (opex) rose about 26% YoY to ₹930 crore in 4QFY26. Despite the increase, Motilal Oswal flagged a continued improvement in the cost-to-income profile.

The cost-income ratio declined to about 45%, compared with 47% in 3QFY26 and 53% in the year-ago period. The improvement indicates stronger income growth relative to the expense base during the quarter.

Pre-provision profit and PAT beat

Pre-provision operating profit (PPoP) came in at ₹1,160 crore, up about 76% YoY, and was described as in line. After provisions, profit after tax (PAT) post NCI stood at ₹590 crore, which Motilal Oswal said was around a 10% beat.

The beat was also supported by lower credit costs than the brokerage had built into its model. This is consistent with the report’s emphasis on the credit-cost trajectory as a swing factor for profitability.

Margins and credit costs

Motilal Oswal’s calculated net interest margin (NIM) contracted by about 5 basis points QoQ to 6.7%.

Credit costs were reported at ₹330 crore, about 12% lower than the brokerage’s estimate. The quarter’s provisioning level translated into annualised credit costs of about 1.9%, lower than ~2.6% in the previous quarter and ~2.7% in the year-ago period, as per the note.

Full-year PAT: sharp jump versus FY25

For FY26, PAT (post-NCI) was ₹1,660 crore, compared with ₹380 crore in FY25. The report presented this as a sharp step-up in profitability on a year-on-year basis.

Motilal Oswal’s outlook commentary suggests it expects profitability to remain supported by a combination of income mix (including assignments and co-lending) and growth.

Outlook: FY27 assumptions and valuation anchor

Motilal Oswal said it has raised its FY27 EPS by about 6% to factor in higher other income due to assignments and co-lending, alongside slightly higher AUM growth. The brokerage reiterated its Buy rating and maintained a target price of ₹600, noting that the target is based on Mar’28E SoTP.

Separately, the provided material also includes a reference to an unchanged target price of ₹720 (also described as SoTP-based) along with a modelling assumption of consolidated AUM/PAT CAGR of ~20%/~32% over FY26 to FY28, and an estimated RoA/RoE of 2.6%/16.5% in FY28. These appear as part of a different recommendation snapshot within the same compiled text.

Analyst targets and consensus snapshots cited in the text

The article content contains multiple target-price references and a separate consensus snapshot. One section lists “Mean Recos by 4 Analysts” and elsewhere cites S&P Global Market Intelligence data.

The S&P Global snapshot in the text shows 4 analysts, an average target price of ₹525, and a current price of ₹508.15, implying an upside of 1.58%. It also lists a high target of ₹550 and a low of ₹450.

Key numbers from Motilal Oswal’s 4QFY26 note

Target prices mentioned across the compiled text

What investors will likely track next

The Motilal Oswal note points to assignments and co-lending as key drivers behind its revised FY27 assumptions. Investors tracking the stock will likely monitor how the company sustains other income, and whether margin movement remains contained after the 6.7% calculated NIM reported in the note.

Credit costs are another focal point, especially after the decline in annualised credit costs to ~1.9% in 4QFY26 as presented in the report. Cost discipline will also remain important, given the cost-income ratio improved to around 45%.

Conclusion

Motilal Oswal’s April 30, 2026 note kept a Buy rating on IIFL Finance with a ₹600 target, citing strong YoY growth in income, improved operating efficiency, and lower credit costs, alongside a PAT beat in 4QFY26. The brokerage’s stated next step is its updated FY27 assumptions, which build in higher other income from assignments and co-lending and slightly higher AUM growth.