Buy Poonawalla Fincorp; target of Rs 560: Motilal Oswal

buy

Motilal Oswal's research report on Poonawalla Fincorp

Poonawalla Fincorp (PFL) has largely moved past its portfolio clean-up and balance sheet repair phase and is now transitioning into a structurally stable growth cycle, supported by a rebuilt operating platform. The company has re-architected its business model with deeper AI-led integration across underwriting, fraud detection, risk analytics, collections, and targeted marketing, enabling sharper credit selection, faster turnaround times and more efficient customer acquisition. As a result, PFL is witnessing strong traction across its newly launched product segments, with disbursement momentum accelerating across all its verticals. New businesses already contribute ~11% of AUM and ~20% of quarterly disbursements, highlighting rising customer acceptance, improving distribution throughput, and increasing diversification.

Outlook

PFL currently trades at 2.2x FY27E P/B, and we estimate AUM/PAT CAGR of ~46%/129% over FY26-FY28E, with RoA/RoE expected to reach ~2.5%/15% by FY28E. We reiterate our BUY rating with a target price of INR560 (based on 2.7x Dec’27E BVPS).

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Poonawalla Fincorp - 1603026 - moti