Target: ₹622
CMP: ₹488.55
Strong AUM growth (68 per cent y-o-y, 15.6 per cent q-o-q) and better NIM led to Poonawalla Fincorp’s Q2 FY26 about 39 per cent y-o-y PPoP growth to ₹360 crore. Development of AI in all key processes continues to deepen, with 45 AI projects undertaken. We build in a 46 per cent AUM CAGR over FY25-FY28, prioritising widening of products and sustainable growth.
Capital infusion of ₹1,500 crore by the promoter will further increase growth prospects for the NBFC. NIM is expected to rise to 9 per cent through FY27. We build in a higher cost-income of 54 per ent over FY26/27 on greater investment in distribution.
Asset quality improved sharply, at 1.6 per cent GNPA, with credit cost seeing a marginal increase at 260bps. Stage 2 assets improved by 30bps to 1.3 per cent. We expect credit cost to taper down over FY27-28 on strong risk calibration.
Despite premium valuations, we retain a Buy, valuing it at 4x Sep’27e P/BV (earlier 3.9x) as a marquee management team, risk precision capabilities and strong tech architecture will drive the fastest growth among peers (a 46 per cent AUM CAGR over FY25-28), with improving RoA prospects to 2 per cent in FY27.