Motilal Oswal's research report on Poonawalla Fincorp
PFL’s 3QFY23 standalone PAT grew 88% YoY to ~INR1.5b (inline). The healthy operational performance was driven by ~33bp QoQ expansion in margins and provision write-backs of ~INR450m. 9MFY23 PAT grew ~98% YoY to ~INR4b. 3QFY23 NII grew 24% YoY to INR3b, while PPOP grew 36% YoY to INR1.56b (inline). The company is focused on improving productivity, supported by digitization and is reasonably confident of scaling up its businesses without incurring additional manpower expenses. PFL has laid down a robust foundation for sustainable profitability through initiatives that will lead to lower operating costs (as a % of AUM), higher business volumes and robust asset quality. We model a standalone AUM/PAT CAGR of ~40%/51%, respectively, over FY23- FY25E and expect PFL to deliver a RoA/RoE of 4.8%/12%, respectively, in FY25.
We reiterate our Buy rating on the stock with a TP of INR350 (premised on 2.3x FY25E BVPS).