Poonawalla Fincorp's rating upgraded to CRISIL AAA

Poonawalla Fincorp

Rating agency Crisil Ltd has upgraded the long-term ratings of Poonawalla Fincorp Ltd (PFL) to AAA from AA+. The upgrade takes into account the increased strategic importance of PFL to the Cyrus Poonawalla Group, whose flagship company Serum Institute also has a triple-A rating.

The rating upgrade also reflects the company's improved standalone profile which is characterised by a steady scale-up of the load book with a diverse product offering, healthy capitalisation metrics, an improving earnings profile, and a healthy resource profile with a low cost of funds, said Crisil.

The group has made domestic consumption a central component of its growth philosophy, and PFL will be crucial to carry out this plan after Poonawalla Housing Finance (PHFL) has been divested.

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"The rating upgrade testaments our business model and relentless focus on executing the stated strategy to build a strong foundation for a long-term sustainable leadership position in the industry. The upgrade would help further strengthen our liability franchise, optimize borrowing cost, and accelerate our growth journey," said Abhay Bhutada, Managing Director, PFL, in a regulatory filing.

Magma Fincorp (MFL) was acquired by Cyrus Poonawalla Group last year, and the business was rechristened as a result. The new management updated its product strategy, focusing on small businesses in semi-urban and metropolitan areas as well as high-quality, credit-tested, mass-affluent retail clients.

As of December 31, 2022, the company reported assets under management (AUM) of Rs 13,929 crore, which increased to around Rs 16,120 crore as of March 31, 2023.