IIFL Finance shares hit 52-week low after HSBC downgrades NBFC stock, halves target price

IIFL Finance share price, IIFL Finance share price target: IIFL Finance shares faced selling pressure on Thursday, March 14, after foreign brokerage HSBC downgraded the NBFC stock to 'underperform' from 'buy' and reduced its target price by more than half to Rs 340 apiece. The IIFL stock ended 3.3 per cent lower at Rs 371.2 apiece, falling for the fifth trading session in a row, after dropping as much as 4.7 per cent to a 52-week low of Rs 366 apiece in intraday trade on BSE. 

HSBC's target price implied a downside of 11.4 per cent from Wednesday's closing price.  

IIFL Finance latest news: Fund-raise

After market hours on Wednesday, IIFL Finance said its board had approved raising up to Rs 2,000 crore through a mix of rights (Rs 1,500 crore) and non-convertible debentures (Rs 500 crore). 

The NBFC looks to shore up its capital after the RBI barred it from sanctioning, disbursing, and selling gold loans citing "material supervisory concerns" in its gold loan portfolio, causing a meltdown in its stock.

IIFL Finance share price target: HSBC downgrades to underperform

While downgrading the stock to 'underperform', the brokerage reduced its target for the NBFC stock to Rs 340 from Rs 790. 

Why the brokerage turned bearish

According to HSBC, as IIFL Finance's gold loan business stands disrupted, it may impact the company's overall AUM growth, revenue and profitability, and force its other businesses to moderate growth.

The brokerage reduced its FY25-26 earnings per share estimates for the NBFC to 21-38 per cent. 

The actions by lenders and credit rating agencies remain uncertain, it added. 

With inputs from agencies