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

Emkay Global Financial's research report on Poonawalla Fincorp

Poonawalla Fincorp sustained its strong operation momentum in Q2FY24, with AuM growing 14% QoQ to Rs202bn, disbursement at Rs78bn (+11%QoQ), adj. PAT at Rs2.3bn (+15% QoQ) and GS3/NS3 at 1.36%/0.72% (-6/-4bps QoQ). However, one-time provision of Rs9.1bn and write-off of Rs1.7bn on the discontinued/legacy book, created out of the Rs23.1bn gains from the housing business sale, came as a surprise.

Outlook

Overall, Management remains satisfied with the execution of its ‘digital first’ and urban prime focused strategy; it is also confident about Company’s future growth and profitability. Accounting for the Q2 developments, we have adjusted our FY24-26 estimates and reiterate our BUY rating and Sep-24E target price of Rs430/sh (implied FY25 P/BV: 3.5x).

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