Reduce Poonawalla Fincorp; target of Rs 476: Deven Choksey

Deven Choksey's research report on Poonawalla Fincorp

Net Interest Income (NII) for Q2FY26 stood at INR 9,050 Mn , marking a 40.3% YoY and 17.8% QoQ growth, driven by strong disbursement momentum and improved yield mix across products. Pre-Provision Operating Profit (PPOP) reached INR 3,866 Mn, rising 38.5% YoY and 19.1% QoQ, reflecting scale efficiencies despite continued investments in new business verticals. Net Profit for the quarter came in at INR 742 Mn, up 18.5% QoQ, supported by healthy operating performance and lower credit costs. Net Interest Margin (NIM) remained robust, with management reaffirming confidence in sustaining normalized margins near the ~9% level over the next few quarters. The AUM expanded to INR 4,77,010 Mn, up 68.0% YoY and 15.6% QoQ.

Outlook

We value stock at 3.6x FY27E ABVPS and arrive at a Target Price of INR 476. While operational performance and management execution remain strong, elevated valuations makes the risk–reward balance unfavorable at current levels; hence, we downgrade our rating to “REDUCE” from “ACCUMULATE.”

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