IIFL Finance NCDs snapped up in frenzy—Rs 475cr raised in just three days

IIFL Finance Limited, a major non-banking financial company (NBFC) in India, announced the early closure of its public issue of secured, rated, listed redeemable non-convertible debentures (NCDs) following overwhelming demand. Initially scheduled to close on April 23, 2025, the issue was wrapped up nearly two weeks ahead of plan—on April 11—after garnering ₹475.03 crore in subscriptions by April 9. The NCD offering, which opened on April 7, was oversubscribed 4.75 times and operated on a first-come-first-served basis.

This strong demand for IIFL Finance’s NCDs reflects investor appetite for high-yield debt instruments backed by well-rated and reputable issuers, particularly as equity markets remain volatile. The company’s ability to mobilise nearly the full ₹500 crore—combining a ₹100 crore base issue with a ₹400 crore green shoe option—underscores its credibility and capital market access.

What Is Driving Investor Confidence in IIFL Finance?

Investor enthusiasm has been significantly influenced by IIFL Finance’s high credit ratings and attractive yield structure. The NCDs carry “CRISIL AA/Stable” and “[ICRA] AA (Stable)” ratings, suggesting a high degree of safety in terms of timely payment of financial obligations and low credit risk.

Interest rates offered on these NCDs reached up to 10.24% per annum for the 60-month tenor under Series IX, with options to receive interest monthly, annually, or on a cumulative basis. Such flexibility and returns continue to appeal to income-seeking investors, especially in a climate where bank deposit rates often trail inflation.

Govind Modani, Head of Treasury at IIFL Finance, attributed the issue’s success to the company’s strong corporate profile and proven track record spanning more than 25 years. The firm’s consistent performance across lending verticals and adherence to prudent risk frameworks have helped build sustained investor trust.

What Will the NCD Proceeds Be Used For?

The funds raised from the NCD issuance will be allocated towards onward lending, refinancing of existing borrowings, debt servicing (including interest and principal repayment), and general corporate purposes. This diversified usage reflects the company’s strategy to not only maintain liquidity but also expand lending operations and reduce cost of capital through prudent refinancing.

Given the high demand and strong investor interest, the issuance signals market validation of IIFL Finance’s financial strategy and long-term positioning in India’s rapidly evolving credit ecosystem.

How Strong Are IIFL Finance’s Financials and Operational Network?

As of December 31, 2024, IIFL Finance had consolidated assets under management (AUM) of ₹71,410.19 crore. The company also maintained sound asset quality, with a gross non-performing asset (GNPA) ratio of 2.42% and net NPA (NNPA) of 1.01%. Importantly, over 71.92% of its consolidated loan book was backed by adequate collateral, reducing exposure to unsecured defaults and enhancing credit stability.

With a pan-India network of 4,858 branches and a workforce exceeding 38,000 employees, the company has built deep reach across urban and semi-urban areas. Its diversified offerings—ranging from gold loans and home finance to MSME loans, microfinance, personal lending, construction finance, and capital market finance—enable it to cater to both retail and institutional borrowers.

Subsidiaries such as IIFL Home Finance Limited, IIFL Samasta Finance Limited, IIHFL Sales Limited, and IIFL Open Fintech Private Limited support the company’s holistic financial services footprint.

How Did the NCDs Perform in Market Terms?

The issue, priced at a face value of ₹1,000 per debenture, had a minimum application size of ₹10,000, thereby making it accessible to a wide base of investors. The NCDs will be listed on both the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE), enhancing liquidity and enabling early exits if desired.

Lead managers included Trust Investment Advisors Private Limited, Nuvama Wealth Management Limited, and IIFL Capital Services Limited (formerly IIFL Securities). The NSE was the designated stock exchange for the issuance, adding credibility to the listing and settlement process.

What Does Stock Market Sentiment Indicate About IIFL Finance?

As of April 9, 2025, IIFL Finance’s stock closed at ₹325.10 on the NSE, reflecting a 2.54% decline from the previous day. Over the past three months, the stock has corrected by over 21.7%, and the one-year decline stands at around 25.5%. This underperformance has prompted cautious sentiment among short-term traders, but analysts remain broadly optimistic about its long-term prospects.

Despite near-term volatility, analyst consensus pegs a 12-month target price of ₹415, suggesting an upside of nearly 28% from current levels. The outlook is buoyed by confidence in the company’s balance sheet, growth strategy, and successful fundraises such as the recent NCD issue.

Analysts have largely maintained a “Strong Buy” recommendation for long-term investors, highlighting the company’s healthy asset book, robust collateral coverage, and diversified lending model. For current investors, the recommendation is to “Hold” and monitor quarterly earnings and macroeconomic developments. Those with lower risk appetite or seeking short-term gains may consider reducing exposure in view of recent market underperformance.

The broader sentiment around the NBFC sector remains cautiously optimistic. As regulatory scrutiny increases and credit growth rebounds post-pandemic, financially resilient NBFCs like IIFL Finance are expected to outperform peers with weaker governance or higher GNPA levels.

What Does This Mean for Investors and the Broader NBFC Landscape?

The successful early closure of the ₹500 crore NCD issue not only strengthens IIFL Finance’s capital base but also sends a strong message about investor confidence in India’s NBFC sector when backed by disciplined financial management. The firm’s ability to tap the bond market at competitive yields reinforces its attractiveness as a fixed-income option.

For the NBFC industry, this development suggests that well-rated companies with consistent track records continue to command investor trust despite volatility in public equities and concerns around liquidity in the broader financial system.

As India enters a growth-focused fiscal phase in 2025, capital-intensive sectors like NBFCs are likely to remain in focus. Fundraising through NCDs is expected to increase as companies look to lock in favourable borrowing costs before any potential shift in interest rate cycles.