IIFL Finance Limited (IIFL) is eyeing a 20-25 per cent increase in bottomline growth this fiscal on strong demand for its core products such as home and gold loans and micro finance, its Chief Financial Officer Rajesh Rajak has said.

The non-banking finance company is expecting a sharp jump up in its profits this fiscal, and is confident of achieving 20 per cent topline growth, Rajak told BusinessLine in an interview.

In FY22, IIFL Finance had recorded a net profit of ₹1,188 crore, up 56 per cent over ₹760 crore achieved in the previous fiscal. The total income grew 17 per cent in FY22 to ₹7,006 crore (₹5,990 crore).

“We are confident of sustaining this performance as we have increased our branch network. We see all our segments — home, gold and microfinance doing well. In gold market, about 65 per cent of the market are still in informal segment. We don’t see any slowdown in any of the four core products that the company is focused on”, Rajak said.

Branch network expansion

“Our branch network last year was up 40 per cent on a year-on-year basis. We have 3,200 branches with over 80 per cent of them in Tier 2 and 3 towns. Organic growth from the existing branches would also contribute to our topline growth”.

Rajak made it clear that the strong growth seen in 2021-22 was not due to the base effect and even in last March, the company had 18 per cent year-on-year growth. The compounded annual growth rate (CAGR) in the last three years has been around 18-20 per cent. IIFL Finance currently operates only in four segments—home loan, gold loans, business loans and microfinance. 

On diversification

He said that the company is not looking to enter the consumer durable loans, commercial vehicle financing, car loans or two wheeler loans. ”We are not into consumer durables, commercial vehicles, car loans or two wheelers. There are no plans to get into them for now. For the time being, all our focus will only be on our four core products,” he added.

On IIFL Finance’s robust performance, Rajak highlighted the three trends that is gaining traction in the last few years —digitisation, urbanisation and more credit moving into formal sources of delivery. “We are rightly positioned at transition point and that is what is contributing to our growth”, he added. 

Credit cards foray 

IIFL Finance would soon approach the Reserve Bank of India (RBI) for licence to enter credit cards segment like several others looking to enter this lucrative space.

“Getting into credit cards would help increase our product range and retain customers within our ecosystem. We have eight million customers and many would be eligible or interested in a card. We want to enter this space on our own. There is ample opportunity as the credit card penetration is still low in India compared to the emerging market economies”, Rajak added.

Co-lending partnerships

Rajak said that the co-lending is picking up in a big way and the IIFL Finance has already partnered with 10-15 banks with the State Bank of India being the most recent. “The co-lending has picked up, but it still has long runway ahead of it. We will be widening our partnerships. We will also do more in partnerships that are working well”, he added.

IIFL Finance has tied-up with OPEN (a neo bank), which in turn, has partnerships with 17 banks. “As a NBFC, we cannot offer current accounts. For our eight million customers, we offer lending products. The liability products will be offered through OPEN. This completes our product suite. Today, if one of our customer wants a car loan, he can use OPEN”, he added.

Capital raising

Rajak ruled out any fresh capital raising for now, and pointed out that the net profit of about ₹1,200 crore last fiscal would come in handy to take care of the requirements. Also, IIFL currently has capital adequacy ratio of 24 per cent against the regulatory requirement of 15 per cent. “We are Aatmanirbhar (self-sufficient) on capital front,” he added. 

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