Buy Poonawalla Fincorp; target of Rs 360: Motilal Oswal

Motilal Oswal's research report on Poonawalla Fincorp

Poonawalla Fincorp’s (PFL) 3QFY25 PAT declined ~93% YoY to ~INR187m (vs. MOFSLe: INR1.52b). NII grew ~25% YoY to ~INR6.1b (in line), while PPoP grew ~7% YoY to ~INR3.7b (in line). Other income declined ~2% YoY and ~32% QoQ to ~INR581m, due to no assignment income or write-backs in 3Q. Opex in 3QFY25 rose 50% YoY to INR3b, with C/I ratio declining to ~45% (PQ: 57%). In 2QFY25, there was a one-time opex of INR710m. Provisions stood at INR3.5b (est. ~INR1.6b), translating into annualized credit costs of ~4.7% (PQ: 13% and PY: -0.1%). In 2QFY25, the company took a one-time provisioning of INR6.7b on the STPL book.

Outlook

The near-term outlook will warrant a detailed understanding of the various pillars of execution, and we will look forward to more clarity from the company management. Reiterate BUY with a TP of INR360 (premised on 2.8x Sep’26E BVPS).