IIFL Finance Q3 FY26: PAT +20%, AUM ₹98,336 cr

What changed in the December-quarter update

IIFL Finance’s Q3 FY26 and nine-month results pointed to a sharper focus on secured lending, especially gold and mortgage loans, alongside tighter risk controls. The company reported strong growth in assets under management (AUM) and higher profitability, while also highlighting improving asset quality trends. Management commentary in the shared update also stressed that it has exited certain high-risk pockets and strengthened governance systems, including AI-led risk monitoring.

The results also arrived against a backdrop of recent volatility in the stock price, with the counter falling sharply ahead of the earnings release. Separately, rating agencies referenced in the update reaffirmed ratings and improved outlook, supporting the company’s broader balance sheet narrative.

Q3 FY26 headline numbers

For Q3 FY26, consolidated profit after tax before non-controlling interest (PAT pre-NCI) stood at ₹501.35 crore, a 20% year-on-year rise. Basic EPS for the quarter was ₹10.92, while book value per share was reported at ₹306.85.

Pre-provision operating profit (PPOP) rose to ₹1,075 crore, up 101% year-on-year and 4% quarter-on-quarter, indicating a strong operating rebound. The cost-to-income ratio was 46.4%, and operating expenses to AUM were 3.9%, as reported in the financial highlights.

AUM grows 9.1% QoQ, led by gold loans

Consolidated AUM increased 38% year-on-year and 9.1% quarter-on-quarter to ₹98,336 crore. Within this, gold loan AUM was reported at ₹43,432 crore, making it the most visible growth engine in the quarter.

The broader narrative in the provided update also points to a deliberate shift toward collateral-backed retail lending. The company indicated it has rebalanced away from higher-risk segments and geographies, which it links to a steadier asset quality trajectory.

Nine-month performance shows sharp year-on-year jump

For the nine months of FY26, PAT (pre-NCI) was ₹1,193.46 crore, up 265% year-on-year. The company’s summary attributes this to a stronger operating run-rate, a larger secured book, and better control on risk and provisioning.

The same material also references H1 FY26 PAT of ₹692 crore as part of the broader financial strength snapshot, alongside profitability ratios and capital levels.

Asset quality and portfolio reset measures

The update notes that Stage 2 and Stage 3 trends were moving down, and provision coverage ratio (PCR) was reported at 93%. It also states that the portfolio reset included exits from unsecured MSME, micro-LAP, and certain high-risk microfinance geographies.

In addition, the company highlighted investments in AI-led risk and governance systems. While detailed NPA numbers were not included in the provided text, the direction of travel was framed as “improved asset quality” and tighter underwriting.

Ratings and liquidity: outlooks turn positive

The material states that S&P reaffirmed the rating and revised the outlook to positive. It also mentions Fitch Ratings affirming the rating at ‘B’ and revising the outlook on IIFL Finance’s long-term issuer default rating from Stable to Positive.

Earlier context in the input also references a $125 million bond issue that strengthened liquidity in a period when provisions and NPAs pressured profitability. Separately, the update lists liquidity at ₹8,170 crore in its financial strength snapshot.

Dividend and capital actions

IIFL Finance declared an interim dividend of ₹4 per share, with a record date of January 29, 2026. This is a key shareholder-facing announcement from the Q3 FY26 update.

For FY26, the board also approved an enabling resolution to raise up to ₹10,000 crore via non-convertible securities, subject to shareholder approval at the AGM, as mentioned in the FY25 and outlook sections of the input.

Market reaction and what analysts were tracking

Ahead of the December-quarter earnings, shares of IIFL Finance fell over 6% to a low of ₹582.95. At 1054 IST, the stock was down nearly 4% at ₹599.45 on the NSE.

Motilal Oswal Financial Services estimated December-quarter net profit at ₹487 crore (INR 4.87 billion), citing higher net interest income and strong growth in gold loan AUM. The same feed also states that for the December quarter, IIFL Finance reported net profit of ₹487 crore and net interest income of ₹1,603 crore (INR 16.03 billion).

The input also mentions that two brokerage reports available on the company with Informist had a ‘buy’ rating with an average target price of ₹635. Separately, S&P Global Market Intelligence data cited in the input shows 4 analysts with an average target price of ₹525 (high ₹550, low ₹450), with 100% ‘Buy’ recommendations.

Context: post-embargo normalisation and FY25 turnaround

The company’s broader narrative includes a reference to full normalisation in gold loans after the gold loan embargo (noted as September 2024 in the input). It also states customer retention above 98% and improving yields in gold loans.

On FY25, consolidated revenue from operations was ₹10,210.90 crore, up from ₹9,838.63 crore in FY24. Consolidated PAT for FY25 was ₹1,974.22 crore, while standalone results showed a loss of ₹409.57 crore due to a ₹586.50 crore exceptional provision.

The update also notes that Q4 FY25 marked a turnaround, with consolidated PAT (pre-NCI) at ₹251.4 crore, up 208% quarter-on-quarter, and AUM rising 10% sequentially to ₹78,341 crore.

Key figures at a glance

Business mix details shared in the update

What to watch next

The outlook section referenced in the input outlines FY26 focus areas including prudent balance sheet growth and a 40% rise in technology investment for AI and digital. It also provides segment growth guidance: home loans 15%-18%, gold loans 25%-30%, MSME loans 25%-30%, and microfinance 5%-10%.

Credit cost guidance for FY26 is stated at 2.5%-2.7%, with normalisation expected in FY27 as the portfolio mix shifts. Investors will also track execution against the stated secured-lending strategy, the trajectory of asset quality indicators, and progress on fund-raising approvals.