Poonawalla Fincorp Ltd (PFL) aims to be a tech-enabled diversified NBFC with focus on consumer and small & medium business finance. It is a subsidiary of Rising Sun Holding (RSHPL), which is owned and controlled by Adar Poonawalla.
“We believe that the company is well poised for growth given the low base (AUM of Rs142bn as on FY21), recent capital infusion and improvement in liability profile. Poonawalla Fincorp has a strong balance sheet with CAR of 54%, additional provisions at 0.9% of AUM and Stage 3 PCR of 50%,” analysts at Nirmal Bang said in a note.
The brokerage has initiated coverage on Poonawalla Fincorp shares with an ‘Accumulate rating’ as the stock price has run up 5x in last 13 months, however ₹200-210 remains a good entry point from long term return perspective, it said. It has a target price of ₹261 per share.
“In our view, the strong run-up in the share price (around 5x) over the last 13 months has priced in the turnaround story however, execution will drive further re-rating,” the brokerage added.
Poonawalla Fincorp discontinued used CV/CE, tractors & auto lease finance businesses, which generally carry risk of high delinquencies. The continued and new product lines are focused towards consumer and small/medium business loans to credit tested customers with a focus on healthy IRR, RARoC and an opportunity to cross sell. The management has guided for 3x AUM growth to ₹400 billion by FY25, the note highlighted.
The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.
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