Poonawalla Fincorp Limited, a notable player in consumer and MSME finance, recently announced its Q2FY25 unaudited financial results with significant growth across its key financial metrics. The Board reported a 40% year-on-year (YoY) increase in Assets Under Management (AUM), reaching a robust ₹28,396 crore, and a 22% YoY rise in Net Interest Income (NII), reflecting the company’s focus on sustainable growth and diversified asset base.

Key Financial Highlights

The AUM mix of Poonawalla Fincorp consists of 33% MSME finance, 28% personal and consumer finance, 19% loans against property, and 15% pre-owned car finance. This blend underscores its targeted market approach within both the consumer and MSME lending spaces, marking a consistent upward trajectory across various financial products.

Net Interest Income (NII), inclusive of fees and other income, rose to ₹645 crore—a 22% YoY increase. This uptick is attributable to enhanced loan portfolio performance and operational efficiency. Further, the Pre-Provision Operating Profit (PPoP) reached ₹279 crore, factoring in a one-time operational expense of ₹71 crore.

Strengthening Asset Quality

In Q2FY25, asset quality remains a priority. The Net NPA was stable at 0.33%, down by 39 basis points YoY, demonstrating Poonawalla Fincorp's commitment to maintaining healthy credit metrics. The Gross NPA, however, saw a slight increase to 2.10%, a 74-basis point rise YoY, attributed to slippages in the Short-Term Personal Loan (STPL) portfolio. The company has proactively taken a one-time provisioning of ₹666 crore for this portfolio, aligning with rigorous recalibration efforts on credit parameters.

In this quarter, the Provision Coverage Ratio experienced a notable improvement, surging from 52.53% to 84.47% QoQ, which significantly strengthens its financial buffer against potential credit risks.

Capital Adequacy and Liquidity Position

Poonawalla Fincorp's Capital Adequacy Ratio (CAR) was reported at 29.22%, with Tier-1 capital at 27.75%, comfortably exceeding the regulatory requirement of 15%. This robust CAR indicates the company's strong capital position, enabling it to continue supporting expansion goals while maintaining adequate risk coverage.

The company’s liquidity buffer stands at ₹5,710 crore, ensuring ample resources to navigate any market volatility and sustain its growth initiatives. This position also provides flexibility to invest in future product offerings, a plan reiterated by CEO Arvind Kapil, who envisions expanding the company’s current four-product lineup to a total of ten over the next few quarters.

CEO Insights and Future Outlook

According to Mr. Arvind Kapil, Managing Director and CEO of Poonawalla Fincorp, this quarter marks a pivotal moment as the company recalibrates its risk management practices and asset portfolio. Mr. Kapil highlighted that the company’s STPL provisioning and enhanced risk management framework would lay a resilient foundation, contributing to long-term financial stability. “This recalibration, supported by a strong management team, will enhance our AUM, diversify customer segments, and lead to a stable profitability profile,” said Kapil.

Looking ahead, Poonawalla Fincorp’s strategy focuses on product expansion, risk mitigation, and capital adequacy. The introduction of additional products, backed by comprehensive distribution and targeted customer segments, aims to drive substantial AUM growth over the next 4-6 quarters.

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This performance underscores Poonawalla Fincorp’s commitment to strategic growth and financial resilience as it aims to solidify its presence in the NBFC sector. With its strong asset quality and capital reserves, the company is well-prepared to leverage emerging opportunities in consumer and MSME finance markets.