Poonawalla Fincorp Limited — Q4 FY26 earnings call

Call held 5 May 2026

Management summary

Poonawalla Fincorp reported a strong Q4 FY26, marked by significant growth in AUM, NIM expansion, and improved profitability. The company demonstrated robust asset quality with declining GNPA and credit costs, alongside enhanced operational efficiency through AI and digital investments. A recent capital raise further strengthened its capital adequacy, positioning it for continued growth.

Highlights

  • Assets Under Management (AUM) closed at ₹60,348 crores, reflecting a robust year-on-year growth of 69.4%.

  • Net Interest Margin (NIM) expanded sequentially by 43 basis points to 9.05% in Q4FY26, achieving the 9% target in 3 quarters.

  • Profit After Tax (PAT) showed a 70% sequential growth, reaching ₹255 crores for the quarter.

  • Return on Assets (ROA) moved to 1.81% this quarter, up from 1.2% last quarter and 0.78% in March '25, indicating strong structural operating leverage.

  • Gross Non-Performing Assets (GNPA) improved to 1.44% in Q4FY26 from 1.51% in Q3FY26, with Net NPA at 0.74%.

  • Credit cost declined further to 2.51% in Q4FY26 from 2.62% in Q3FY26, supported by improving 6MoB30+ trends.

  • Opex-to-AUM ratio declined from 4.76% in Q4 last year to 4.13% this quarter, driven by productivity gains in new businesses and AI investments.

  • Capital Adequacy Ratio (CAR) stood at 16.83% (Tier 1 at 15.90%), with a stimulated CAR of 20.74% post ₹2,500 crores capital raise.

Key financials

  1. AUM ₹60,348 Cr +69.4%YoY
  2. NIM 9.1% +0.43%QoQ
  3. PAT ₹255 Cr +70%QoQ
  4. ROA 1.8%
  5. GNPA 1.4% -0.07%QoQ
  6. Credit Cost 2.5% -0.11%QoQ
  7. Opex-to-AUM 4.1%
  8. NII (incl. fees & other income) ₹1,276 Cr +78.5%YoY
  9. PPoP ₹695 Cr +31.6%QoQ
  10. Capital Adequacy Ratio 16.8%

What they filed

Q1 FY27: revenue up 77.3%, net profit up 388.9% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue989 1,057 1,166 1,314 1,542 +56%1,818 +72%2,115 +81%2,330 +77%
Net profit-471 19 62 63 74 +116%150 +689%255 +311%308 +389%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Capital allocation

high confidence
  • Liquidity Liquidity disclosed Surplus liquidity stood at ₹7,590 crores at the end of March 31, 2026. A capital raise of ₹2,500 crores was completed in April 2026, further strengthening the balance sheet.
    On the liquidity front, our surplus liquidity of ₹7,590 crores stood at the end of March 31, 2026. (Page 15) ... With successful ₹2,500 crores of capital raise, the stimulated capital adequacy ratio stands at 20.74%. (Page 14)

Guidance & targets

Profitability

  • NIM Profitability · within 3-4 quarters (achieved in 3) · High confidence 9%
    In our Q1FY26 call, we had guided that we will restore 9% NIM levels in three to four quarters. Happy to report back that we have achieved the same in 3 quarters.

    — Arvind Kapil

Efficiency

  • Opex-to-AUM ratio Efficiency · next financial year · Medium confidence lower than current levels
    While we've set ourselves an internal benchmark to close the next financial year at a lower opex to AUM ratio than our current levels, you may see fluctuations quarter-on-quarter for 10 to 25 basis points based on our investment trajectory and clustering of our branch opening, and this is a similar kind of guidance we gave last year as well. But I think the plan is that every March end, we should structurally move to another level and build the strength for the company on opex-to-AUM getting lower.

    — Arvind Kapil

Customer Acquisition

  • Consumer durable customer count Customer Acquisition · over FY27 · High confidence double
    Based on these beliefs, we aim to at least double the consumer durable customer count over FY27, basically strengthening our overall customer acquisition for the company.

    — Arvind Kapil

Digitalization

  • Digital loan conversion rate Digitalization · Q2 FY27 · High confidence improve by over 15%
    Three agents are in pipeline to be delivered in Q2 FY27 are expected to improve our digital loan conversion rate by over 15%.

    — Harsh Kumar

Growth

  • AUM growth Growth · next FY · Medium confidence 35-40%
    So, I think we've given a guidance of AUM of 35-40%. We could be probably a notch better, but it depends. We'll watch closely how this environment plans out. But directionally, I think we would like to look at a 35-40% and commensurate disbursements along with it. And that's the balance that we'd like to keep.

    — Arvind Kapil

What to watch in Q1 FY27

Opex-to-AUM ratio

next financial year
Current 4.13% in Q4 FY26
Target lower than current levels

Why it matters

A key indicator of operational efficiency and profitability, management has set an internal benchmark for reduction.

While we've set ourselves an internal benchmark to close the next financial year at a lower opex to AUM ratio than our current levels, you may see fluctuations quarter-on-quarter for 10 to 25 basis points based on our investment trajectory and clustering of our branch opening, and this is a similar kind of guidance we gave last year as well. But I think the plan is that every March end, we should structurally move to another level and build the strength for the company on opex-to-AUM getting lower.

Risks & concerns

  • Geopolitical situation impact on asset quality

    low

    Analyst asked about geopolitical risks impacting asset quality; management stated exposure is within defined risk tolerance and portfolio is structurally strong.

    I think on the credit side, if you look at, I'll rope in Shriram, but, our exposure in my limited view, remains well within the defined risk tolerance. Internally, we do a lot of worst-case scenarios, stress test modelling across not just the portfolio but across liabilities and a whole lot of disbursal yields. Which is why, if you notice, normally liability yields in the industry changes fast and asset repricing power is very tough to get. But in our case, if you notice the way we've built the model structurally to make it stronger, of course, we didn't know the war is going to come in, but we wanted to fundamentally make it stronger.

    Analyst downplayed

Q&A highlights

3 direct, 2 evasive
Geopolitical risks and asset quality impact Evasive
I think on the credit side, if you look at, I'll rope in Shriram, but, our exposure in my limited view, remains well within the defined risk tolerance. Internally, we do a lot of worst-case scenarios, stress test modelling across not just the portfolio but across liabilities and a whole lot of disbursal yields. Which is why, if you notice, normally liability yields in the industry changes fast and asset repricing power is very tough to get. But in our case, if you notice the way we've built the model structurally to make it stronger, of course, we didn't know the war is going to come in, but we wanted to fundamentally make it stronger.

Analyst questioned potential external risks on asset quality, but management expressed confidence in their risk model and portfolio resilience.

Asked by Chintan Shah

Steady state for 6MoB30+ metric Partial
Yes. So, if you look at, it's coming down quarter-on-quarter, as you've seen the numbers, it would be range bound. But if you actually look at the products such as gold loans, personal loans prime, all of these assets when they start having a larger share into the overall AUM, these numbers will trend downwards. So, that is something which I can tell you.

Analyst sought a specific long-term target for a key asset quality indicator, but management indicated it would be range-bound and trend downwards with portfolio mix changes.

Asked by Chintan Shah

Guidance on fee income trend Evasive
Yes, I think on the fee income side, we all, as a management team have handled fairly large businesses. So, we understand the various vectors of fee income, whether it's your processing charges, whether it's your insurance businesses, whether it's various cross-sell businesses or we plan to launch some new stuff. ... But fee income between various vectors, I'll be honest with you, it's very strongly under our focus and the entire team is working on it, but there's no guidance that we give on these things. Let me have something in the back of my pocket. Broadly, we've given you everything on it.

Management declined to provide specific guidance on fee income, despite acknowledging its importance for ROA, suggesting a degree of conservatism or strategic withholding.

Asked by Kitav

Progress and future of AI and technology Direct
See for us, AI and digital, let me put it as 2 vectors, which could give you value. On the PL prime digital side, if I share the figures with you, our entire business like a 480 to 500 crore kind of disbursement number that we are looking at, now 30% is digital. ... Today, for example, to give you a sense of the output, a single product like a personal loan, PL prime, we are not hiring new underwriters despite our growth rate being substantially robust this year. So, we've kind of frozen our manpower last year. And because of our ability with AI and the way our credit is calibrated, we have successfully managed to grow the operating leverage there.

Management detailed significant progress in AI adoption, including digital disbursement share, and highlighted its impact on operating leverage and headcount efficiency, indicating a core strategic pillar.

Asked by Kitav

Strategy to increase ROA using AI Direct
Let me start with, I think the most interesting one is the ROA. ROA, I think we've taken a 1.81%. If I look at the NIMs, in my limited assessment, looking at the environment, I think our NIMs in my assessment overall are looking positive and accretive. So, I think that's a strength, which gives me confidence that we are very confident as I see through the future of the next few quarters. Right up to the 4 quarters, ROA should gradually start moving strength to strength.

Management linked ROA improvement to NIM strength, pricing power, and operational efficiencies driven by AI, projecting continued ROA growth.

Asked by Jay Betai

Disbursement number for the full year Partial
So, I think we've given a guidance of AUM of 35-40%. We could be probably a notch better, but it depends. We'll watch closely how this environment plans out. But directionally, I think we would like to look at a 35-40% and commensurate disbursements along with it. And that's the balance that we'd like to keep.

Analyst sought full-year disbursement figures, and management provided AUM growth guidance (35-40%) implying commensurate disbursements, but noted dependence on market conditions.

Asked by Jay Betai

Addressing negative ALM post capital raise Direct
So, it gets bridged. With the capital raise, it has been bridged.

Management confirmed that the recent ₹2,500 crores capital raise has resolved the previously identified negative Asset-Liability Management (ALM) gap.

Asked by Jay Betai

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Detailed narrative

Q4 FY26 Financial Performance Overview

Poonawalla Fincorp reported a strong Q4 FY26, with Assets Under Management (AUM) growing 69.4% year-on-year to ₹60,348 crores. Net Interest Margin (NIM) expanded sequentially by 43 basis points to 9.05%, achieving the 9% target ahead of schedule. Profit After Tax (PAT) saw a 70% sequential increase to ₹255 crores, contributing to a Return on Assets (ROA) of 1.81% for the quarter, significantly up from 0.78% in March '25.

Asset Quality and Risk Management

The company demonstrated robust asset quality, with Gross Non-Performing Assets (GNPA) improving to 1.44% in Q4 FY26 from 1.51% in Q3 FY26, and Net NPA at 0.74%. Credit cost declined to 2.51% from 2.62% sequentially, supported by positive trends in 6MoB30+ and improved slippage ratios across all stages. Management emphasized a 'credit by design' framework, focusing on lower-risk cohorts and a predictive AI-driven collection engine to maintain portfolio health.

Operational Efficiency and AI Adoption

Operational efficiency improved significantly, with the Opex-to-AUM ratio declining to 4.13% in Q4 FY26 from 4.76% in the prior year. This was attributed to productivity gains from new businesses and substantial investments in AI. The company has 42 out of 76 planned AI projects deployed, leading to a 100x increase in AI token consumption year-on-year and a 35-40% reduction in customer wait times. AI-powered tools like 'BuildBuddy' and an AI-led hiring platform have also driven significant productivity and cost savings.

Product Portfolio and Digitalization

Poonawalla Fincorp is strategically scaling its six new business lines, which contributed 24% to disbursements this quarter. Prime personal loans saw monthly disbursements of ₹468 crores, with 33% processed through fully straight-through digital processing. The gold loan footprint expanded to 400 operational branches, primarily in Tier 2/3 locations. The company views consumer durables as a critical 'anchor product' for the emerging middle class, having onboarded over 12,500 retail outlets across 240 locations.

Capital Position and Liquidity

The company's capital adequacy remains strong, with a Capital Adequacy Ratio (CAR) of 16.83% and Tier 1 capital at 15.90%. A recent capital raise of ₹2,500 crores in April 2026 further boosted the stimulated CAR to 20.74%, providing ample headroom for growth. Surplus liquidity stood at ₹7,590 crores as of March 31, 2026, and the Liquidity Coverage Ratio (LCR) was comfortable at 181%.

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