Adar Poonawalla-backed Poonawalla Fincorp jump 6% on strong Q3

Shares of Poonawalla Fincorp, earlier known as Magma Fincorp, rallied nearly 6% in opening trade on Tuesday after the non-banking financial company (NBFC) reported robust earnings for the quarter ended December 31, 2022. The company, backed by billionaire Adar Poonawalla, has posted record profit as well as improved asset quality in the third quarter of the fiscal year, driven by broad-based performance.

Snapping three sessions losing streak, Poonawalla Fincorp share price opened 3.8% higher at ₹301.40 against the previous closing price of 290.35 on the BSE. In the first hour of trade so far, the stock gained as much as 5.7% to ₹306.90, while the market capitalisation rose to ₹23,462 crore. In comparison, the BSE Sensex was trading 92 points higher at 61,033 levels.

Poonawalla Fincorp shares currently trade 11% lower than its 52-week high of ₹343.75 touched on April 13, 2022, while it hit a 52-week low of ₹209.15 on June 20, 2022. After stellar performance in the last two years, Poonawalla Fincorp shares have lost some momentum in the near term. The midcap stock has delivered 9% returns in a year and 15.5% in a six month period as compared to over 200% growth in the last two year after Adar Poonawalla acquired the company. The stock price has grown three-fold in the last two years, from ₹98 on February 12, 2021, to ₹307 in intraday today, as investor interest in the stock gained traction after Poonawalla-controlled Rising Sun Holdings acquired 60% stake in the NBFC by subscribing to a ₹3,456-crore preferential issue. As per the latest shareholding pattern on the BSE, Rising Sun Holdings owns 62.05% shareholding in the company.

For the December quarter of 2022 (Q3 FY23), Poonawalla Fincorp reported its "highest-ever" net profit of ₹150 crore, up 88% YoY and 16% QoQ. The company posted PAT at ₹80.22 crore in Q3 FY22 and ₹130 crore in the September quarter of the current fiscal. The return on assets (RoA) also touched highest-ever at 4.50%, up 158 basis points (bps) year-on-year and 46 bps as compared to the last quarter.

The assets under management (AUM) of the company rose 28% YoY and 6% QoQ to ₹13,929 crore. The NBFC also registered highest ever quarterly disbursements at ₹3,369 crores, up by 157% YoY and 8% QoQ.

On the asset quality front, gross non-performing assets (NPA) stood at 1.69%, down by 236 bps YoY and 8 bps QoQ. In a similar trend, net NPA was at 0.89%, down by 108 bps YoY and 5 bps QoQ.

CA Abhay Bhutada, Managing Director, said “We are thrilled to be in the middle of this high growth phase with improved asset quality and sustainable profitability for PFL. The quarter gone by, witnessed all round performance on the back of relentless execution with highest ever disbursement, PAT and ROA leading us to high growth trajectory.”

“Q3FY23 also marked the announcement of sale of our housing subsidiary as PFL continues to focus on building a Tech-Led Digital-First financial services company, with leadership position in consumer and MSME financing. As per our long-term guidance on financial metrics, we expect AUM growth of 35-40% with RoA of 4-4.5% as we continue to build a strong retail franchise,” he added.

Poonawalla Fincorp is a three decade old non-deposit taking systemically important non-banking finance company (ND-SI-NBFC), registered with the Reserve Bank of India (RBI). Consequent to the capital raise of ₹3,456 Crores in May 2021, the company is now part of the Cyrus Poonawalla Group with a majority stake owned by Rising Sun Holdings Private Limited, a company owned and controlled by Adar Poonawalla. The company has a standalone AUM of ₹13,929 crore and employs more than 3,000 people. It offers financial services including pre-owned car finance, personal loans, loan to professionals, business loans, SME LAP, supply chain finance, medical equipment and consumer loans.