Investors in IIFL Finance, a prominent NBFC specializing in retail credit, have faced a significant downturn in their wealth due to the sharp decline in the company’s shares following RBI’s imposition of restrictions on its gold loan disbursements. This has raised concerns about liquidity among investors and lenders.
Over the past 12 trading sessions, the company’s share price has witnessed a substantial drop from ₹597 per share to the current trading price of ₹336, marking a steep decrease of 44%.
Despite broader market gains, the stock hit another 52-week low of ₹329.50 in today’s trading session, reaching levels not seen since August 2022.
The company’s market capitalization has shrunk significantly from ₹22,686 crore to ₹12,831 crore, reflecting a loss of ₹9,855 crore over the past 12 trading sessions.
Furthermore, the stock’s performance was influenced by target cuts from brokerage firms, and credit rating agency Fitch placed India’s IIFL Finance’s ratings on negative watch.
Efforts to restore investor and lender confidence, including a commitment of up to $200 million in liquidity support from the company’s top shareholder, Fairfax India, have been made. Additionally, the company successfully raised ₹500 crore through the issuance of non-convertible bonds and plans to raise the remaining ₹1,500 crore through a right issue.
IIFL Finance specializes in retail credit and plays a significant role in providing small-ticket gold, home, and business loans, with loan assets amounting to approximately ₹78,000 crores and a net worth exceeding ₹10,000 crores.
As of December 31, 2023, the gold loan assets under management (AUM) reached ₹24,692 crore, constituting 32% of the total loan assets, with a notable surge in the gold loan AUM in the third quarter of FY24.
Disclaimer: Investors are advised to consult certified experts before making any investment decisions.
