Buy Poonawalla Fincorp; target of Rs 430: Emkay Global Financial

Emkay Global Financial's research report on Poonawalla Fincorp

Our positive stance on PFL is underpinned by three factors: 1) Strong capitalization and promoter’s strength to drive strong credit rating and competitive cost of funding. 2) Focused approach towards customers, products and geography, for driving higher growth with better underwriting and lower credit cost. 3) An extensive digital-first approach with branch/employee-light model, for delivering operating leverage-led accelerated profit and RoE improvement. On the back of these factors combined, we expect PFL AUM To clock 37% CAGR over FY23-26E to ~Rs416bn and the RoA/RoE to improve to ~4.6% and ~15.2%, respectively, by FY26E.

Outlook

We resume coverage on Poonawalla Fincorp (PFL) with a BUY recommendation and Jun-24E target price of Rs 430/share (June 25E P/ABV: 3.0x), implying ~25% upside.