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    Poonawalla Fin

    POONAWALLAGood
    Financial Services·17 Oct 2025
    Management Summary

    Poonawalla Fincorp is currently in an intensive investment phase, launching 6-7 new business lines and expanding its physical footprint to drive long-term sustainable profitability. While current PAT is suppressed by these investments, the company is seeing robust AUM growth and improving asset quality metrics. Management is pivoting toward a more secured book (56% on-book) and a diversified liability profile with a strong focus on AI-led operational efficiency.

    Highlights

    7
    • Assets Under Management (AUM) grew 68% YoY and 15.6% QoQ to ₹47,701 crores.

    • Net Interest Margin (NIM) saw an uptick of 8bps QoQ, standing at 8.4%.

    • Gross NPA (GNPA) improved significantly to 1.59% from 1.84% in the previous quarter.

    • Cost of borrowing dropped by 35bps to 7.69%, driven by increased NCD contribution (now ~35%).

    • Profit After Tax (PAT) stood at ₹74 crores, impacted by an intensive investment phase in new businesses and technology.

    • New product disbursements reached ₹750 crores in September 2025, contributing 17% to total Q2 disbursements.

    • Capital Adequacy Ratio (CAR) remains healthy at 20.85% with Tier 1 capital at 19.63%.

    Key financials

    Single quarter

    06 metrics
    1. 01AUM₹47,701 Cr+68%YoY
    2. 02NIM8.4%+1.0%QoQ
    3. 03GNPA1.6%-13.5%QoQ
    4. 04Cost of Borrowing7.7%-4.3%QoQ
    5. 05PAT₹74 Cr

    Segment breakdown

    LAP
    136% Growth23% Growth
    Business Loans
    54% Growth8% Growth
    Gold Loans
    ₹110 Cr Monthly Disbursement (Sept)160 count Branches
    List

    Guidance & targets

    5
    CategoryTargetPriority
    Capacity
    Branch Network
    400
    High
    Debt
    NCD Share in Borrowing Mix
    30-35%
    High
    Market Share
    Consumer Durable Dealer Points
    12,000
    High
    Headcount
    Education Consultants
    500+
    Medium
    Profitability
    Credit Cost
    Best-in-class
    Medium

    Risks & concerns

    4
    RiskSeverity

    Legacy STPL Book Impairment

    The erstwhile STPL book had a high credit impairment of ₹1,339 cr in FY25; however, management claims the 'worst is behind us' as the book is now only 2% of AUM.Management acknowledged

    medium

    High Opex during Investment Phase

    Intensive investment in 6-7 new businesses and 400 branches is suppressing current profitability (PAT of ₹74 cr).Analyst acknowledged

    medium

    Execution Risk in New Segments

    Management emphasizes that the new team has decades of experience in these specific products, mitigating the 'newness' risk.Analyst downplayed

    low

    Areas of Evasion(1)

    • Specific opex breakup between tech initiatives and DSA costs.

    Q&A highlights

    3

    “Chintan, we've not given a breakup right now on the same. But I think what's important is... our efficiencies for this year, I have already stated, should be measured on how efficiently we can build AUMs.”

    Investors are concerned about the high opex (₹518 cr) and how much is sustainable vs. one-time tech investment.

    asked by Chintan Shah, ICICI Securities

    2 min read5 chapters

    Detailed Narrative

    01

    Aggressive AUM Growth and Product Diversification

    Poonawalla Fincorp reported a robust 68% YoY AUM growth, reaching ₹47,701 crores. The company is successfully diversifying its portfolio, with the on-book secured mix now at 56%. New products launched in the last 6 months, including Gold Loans and Consumer Durable loans, already contribute 17% to quarterly disbursements, showing rapid market acceptance.

    02

    Liability Management and Cost Optimization

    A key highlight was the 35bps reduction in the cost of borrowing to 7.69%. This was driven by a strategic shift toward NCDs, which now account for ~35% of the borrowing mix, up from just 7% in March 2025. Management expects this shift to provide long-term stability and further reduce funding costs in a declining interest rate environment.

    03

    Asset Quality and Credit Cost Trajectory

    Asset quality showed marked improvement with GNPA dropping to 1.59% and Stage 1 assets rising to 97.1%. While the overall credit cost remains at 2.67% due to the legacy STPL book, the credit cost for the 12 core products is significantly lower at 1.51%. Management is confident that as the legacy book runs off, the company will achieve best-in-class credit costs.

    04

    Digital and AI-First Strategy

    The company is heavily leveraging AI, with 45 projects currently mapped and 16 already live. Notable successes include 26% of Prime PL disbursements being processed through a fully straight-through digital journey. AI is also being deployed in taxation, speech analytics for audits, and fraud control, which management believes will be a significant multiplier for operational efficiency.

    05

    Intensive Investment Phase Impacts PAT

    The quarterly PAT of ₹74 crores reflects the company's 'intensive investment phase.' Poonawalla is aggressively expanding its physical footprint, targeting 400 branches by March 2026 and scaling dealer distribution points to 12,000. While this keeps the Opex-to-AUM ratio high at 4.8%, management views this as necessary infrastructure for long-term, predictable profitability.

    This is an AI-generated summary of a publicly available earnings call transcript. It is for informational purposes only and does not constitute investment advice, a recommendation, or an endorsement. inve.money is not a SEBI-registered investment advisor. Please consult a qualified financial advisor before making any investment decisions.