Poonawalla Fincorp Q3 Results Review - Steady Performance; Sequential NIM Expansion Of 30 Bps: Motilal Oswal

Motilal Oswal Report

Poonawalla Fincorp Ltd.’s Q3 FY23 standalone profit after tax grew 88% YoY to ~Rs 1.5 billion (inline). The healthy operational performance was driven by ~33 bps QoQ expansion in margins and provision write-backs of ~Rs 450 million.

Nine months-FY23 profit after tax grew ~98% YoY to ~Rs 4 billion.

Q3 FY23 net interest income grew 24% YoY to Rs 3 billion, while pre-provision operating profit grew 36% YoY to Rs 1.56 billion (inline). The company is focused on improving productivity, supported by digitisation and is reasonably confident of scaling up its businesses without incurring additional manpower expenses.

Poonawalla Fincorp has laid down a robust foundation for sustainable profitability through initiatives that will lead to lower operating costs (as a % of assets under management), higher business volumes and robust asset quality.

We model a standalone AUM/profit after tax compound annual growth rate of ~40%/51%, respectively, over FY23- FY25E and expect Poonawalla Fincorp to deliver a return on asset/return on equity of 4.8%/12%, respectively, in FY25.

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