Poonawalla Fincorp - Winds Of Change, Giving Wings To Fly: Motilal Oswal Initiates Coverage

Motilal Oswal Report

Poonawala Fincorp Ltd. is a non-banking financial company which focuses on consumer and small business finance via products like personal loans, loans to professionals, business loans, small and medium enterprise loans, loan-against-property, pre-owned car finance, medical equipment loans and auto lease.

It operates across 21 states with a lean branch network and standalone assets under management of ~Rs 132 billion as of September 2022. This NBFC is the erstwhile Magma Fincorp wherein consequent to a capital raise of ~Rs 35 billion in May 2021, the Poonawalla Group acquired a controlling stake in the NBFC.

With new promoters on board, Poonawala Fincorp’s access to liabilities rose multifold and it was able to achieve credit rating upgrades that resulted in a significant decline in the cost of borrowings (down ~190 basis points over last 12 months) with better and more diversified liability mix.

This enabled Poonawala Fincorp to refocus on better credit-quality customers and realign its product suite to generate superior risk-adjusted returns.

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