Motilal Oswal's research report onPoonawalla Fincorp
Poonawalla Fincorp’s (PFL) 2QFY27 PAT stood at ~INR3.7b (in line). NII grew ~81% YoY to ~INR13.8b (in line). Other income rose ~49% YoY to ~INR2.1b. Opex rose 37% YoY to ~INR7.1b (in line), with C/I ratio broadly stable QoQ at ~45% (PY: 57%). Opex to AUM rose ~10bp QoQ to 4.15% due to ongoing investment in branches, collections, and tech Infrastructure. Management indicated that the minor sequential increase remains within the guided range, while operating leverage is expected to improve structurally over the next two years. PPoP grew ~127% YoY to ~INR8.8b (in line). Provisions stood at INR3.8b (in line), translating into annualized credit costs of ~2.15% (PQ: 2.35% and PY: ~2.75%). Management shared that 90+ dpd at 6 and 12 MOB for recent originations is ~53% better, indicating stronger early vintage credit performance and sustained improvement in portfolio quality.
We raise our FY27/FY28 EPS estimates by ~3% each to factor in slightly higher NIM (driven by stronger expansion in yields). The stock currently trades at 2.3x FY28E P/BV. We model ~44% AUM CAGR and ~120% PAT CAGR over FY26-FY28E and expect PFL to deliver RoA/RoE of 2.4%/~17% in FY28E. Reiterate our BUY rating with a TP of INR570 (based on 2.7x Sep’28E BVPS).
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