Poonawalla Fincorp Posts Strong Growth and Strategic Expansion

Poonawalla Fincorp Limited, a prominent non-deposit taking systemically important non-banking finance company (NBFC) in India, has posted robust financial results for the quarter ending June 30, 2025. The company has experienced impressive growth in its Assets Under Management (AUM), alongside a solid rise in its Net Interest Income (NII). With strategic moves to bolster its capital base, Poonawalla Fincorp is poised for further expansion in its key business sectors, including consumer and MSME finance.

Strong Growth in AUM and NII

Poonawalla Fincorp Limited

For Q1 FY 2025, Poonawalla Fincorp reported a remarkable 53.0% year-on-year (YoY) increase in its AUM, reaching ₹41,273 crore. This impressive growth in AUM highlights the company's strong operational strategies and its growing presence in key financial segments. The company also saw a 13.6% YoY growth in NII, amounting to ₹768 crore, a reflection of its efficient business model and strategic focus on high-value financial products.

The company’s loan portfolio is well-diversified, with MSME loans contributing 36% to its AUM, followed by 25% from loans against property, 23% from personal and consumer finance, and 13% from pre-owned car finance. This balanced mix has not only fueled growth but also strengthened the company’s financial stability.

Strategic Capital Infusion to Support Growth

Poonawalla Fincorp's Board of Directors approved a capital infusion of approximately ₹1,500 crore through a preferential allotment of equity shares to the promoter. Subject to shareholder approval, this move will further bolster the company's capital base and is a clear indicator of the promoter’s confidence in Poonawalla Fincorp's long-term growth trajectory. The infusion will support the company’s efforts to expand its financial offerings and enhance its market position.

This strategic initiative also ensures that the company maintains a strong financial foundation, with its capital adequacy ratio (CAR) standing at an impressive 20.55%. With Tier-1 capital at 19.02%, Poonawalla Fincorp is well above the regulatory requirement of 15%, ensuring the company’s ability to absorb any financial shocks and continue its growth initiatives.

Maintaining Asset Quality and Risk Management

Despite significant growth, Poonawalla Fincorp Limited has managed to maintain a stable asset quality, with a Gross NPA ratio of 1.84% and a Net NPA ratio of 0.85%. These figures reflect the company’s strong focus on risk management and prudent lending practices. Furthermore, the Provision Coverage Ratio stands at 53.93%, indicating that Poonawalla Fincorp is prepared for any potential asset quality pressures.

The company’s approach to maintaining a risk-first strategy has resulted in a 53 basis points quarter-on-quarter (QoQ) reduction in credit costs. This demonstrates the company's ability to manage its credit risk effectively while continuing to focus on growth and profitability.

Focus on Sustainable and Profitable Growth

Poonawalla Fincorp continues to focus on building a sustainable and profitable business model. Mr. Arvind Kapil, Managing Director and CEO of Poonawalla Fincorp, stated that the company is on track to maintain its growth momentum, with credit costs reducing and a significant AUM increase in the current quarter. The capital infusion and the company’s ongoing investments in new business segments ensure a robust financial future.

The company’s liquidity buffer stands at ₹4,465 crore as of June 30, 2025, which enhances its financial flexibility and ability to support future growth. Poonawalla Fincorp is committed to building a long-term, sustainable business with a clear focus on managing risks while exploring new opportunities in the financial services market.

Strengthening MSME and Consumer Finance Segments

The MSME sector continues to be a key growth area for Poonawalla Fincorp. The company’s financial products for MSMEs are designed to meet the growing demand for accessible credit, and it has seen strong uptake in this segment. Additionally, Poonawalla Fincorp has expanded its consumer finance offerings, including personal loans, loans for professionals, and loans against property, further diversifying its loan portfolio and strengthening its customer base.

The company’s focus on the MSME and consumer finance sectors aligns with the Indian government’s push for financial inclusion, particularly for underserved sectors of the economy. By tapping into these segments, Poonawalla Fincorp continues to expand its reach and contribute to economic development.

Looking Ahead: A Bright Future

Poonawalla Fincorp is well-positioned for the future, with a strong AUM, increasing NII, and an improved capital base. The company’s ability to maintain stable asset quality while expanding its business further reinforces its position as a leader in the Indian NBFC sector. With continued focus on sustainable growth and a diversified loan book, Poonawalla Fincorp is set to make a lasting impact in the financial services space.

The company’s commitment to prudent risk management, responsible lending, and capital strength ensures that Poonawalla Fincorp is on the right path to achieving its strategic objectives. As the company builds on its strong financial foundation, it is poised to make significant strides in the Indian financial landscape, delivering value to its stakeholders and customers alike.

Conclusion

With its strong performance in Q1 FY 2025, Poonawalla Fincorp is well on its way to achieving its long-term goals. The company’s strategic focus on MSME and consumer finance, combined with a strong capital infusion and solid risk management practices, positions it for continued growth. As Poonawalla Fincorp moves forward, it will remain dedicated to building a sustainable and profitable business model that can withstand market fluctuations and deliver value to its customers and shareholders.

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