S&P Upgrades IIFL Finance's Outlook to Positive; Affirms 'B+/B' Ratings
S&P Global Ratings has upgraded IIFL Finance's outlook to 'Positive' from 'Stable' and affirmed its 'B+/B' ratings. The upgrade is driven by IIFL's recovering market share in gold loans, which has grown 2.2x in the past year. S&P expects credit costs to peak in FY26 and improve thereafter.
A positive outlook and rating affirmation from a major credit rating agency like S&P can significantly enhance investor confidence, improve access to capital, and potentially lower borrowing costs, thus having a high impact on the company's financial standing and market perception.
The outlook upgrade by S&P to 'Positive' and affirmation of 'B+/B' ratings, along with positive commentary on market share recovery and expected improvement in credit costs, indicates a favorable assessment of the company's financial health and future prospects.
S&P Global Ratings has revised IIFL Finance's outlook to 'Positive' from 'Stable' and affirmed its 'B+/B' ratings, citing a recovering market share in gold loans. The agency also reaffirmed the 'B+' long-term foreign currency issue rating on the company's outstanding U.S. dollar-denominated senior secured notes.
S&P noted that the outlook revision reflects IIFL's strengthening market share in gold financing, a year after a central bank embargo on fresh gold loans was lifted. The agency expects IIFL to maintain strong capitalization over the next 12 months and anticipates that portfolio pruning and reduced exposure to microfinancing will lower credit costs, with costs expected to peak in the fiscal year ending March 31, 2026.
The company is benefiting from elevated gold loan prices and robust consumer demand, leading to a 2.2x growth in gold loan assets under management (AUM) in the 12 months to September 30, 2025. IIFL's market share in the gold loan segment is now second only to Muthoot Finance Ltd. among nonbank financial institutions in India.
S&P forecasts IIFL's risk-adjusted capital (RAC) ratio to moderately decline to 18%-19% over the next two years from 20.4% as of March 31, 2025. The company's return on assets is expected to improve to 2.3%-2.6% in fiscal years 2027 and 2028, up from 1.9% annualized for the six months ended September 30, 2025, driven primarily by lower credit costs.
IIFL's credit costs were elevated at 3.5% annualized for the first half of fiscal 2026, reflecting stress in the microfinance segment and past offerings of riskier products. However, the company has discontinued these products and reduced exposure to microfinance loans, leading S&P to expect a gradual improvement in credit costs over the next two years to 2.2%-2.3% of total loans.
S&P's positive outlook on the long-term issuer credit rating reflects the view that IIFL will strengthen its market share and maintain robust capitalization over the next 12 months, with credit costs expected to decrease. The company is also likely to maintain its access to funding.
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IIFL Finance Limited filed this with the NSE as a statutory disclosure, categorised under credit ratings. It is a primary document, not a recommendation, and the desk marks it high impact, which is the band that most often changes something.
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See the model portfoliosA plain-language summary of a public exchange filing by IIFL Finance Limited. Read the original for the full detail.