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Informist, Wednesday, Jan. 29, 2025

By Sourabh Kumar

MUMBAI – Poonawalla Fincorp Ltd. is expected to show improved performance in Oct-Dec compared to the previous quarter, but its net profit is still projected to drop by nearly 32% on year. The bottom line is seen falling on the view that the non-bank finance company would have made provisions in Oct-Dec against a reversal of provisions in the corresponding quarter last year. Estimates for the company's net profit range from INR 1.19 billion to INR 2.88 billion.

According to an average of estimates from four brokerage firms, the net profit of Poonawalla Fincorp is anticipated to fall 31.7% on year to INR 1.81 billion. In the Jul-Sept quarter, the non-bank finance company had incurred a loss due to a one-time provision of INR 6.66 billion in its small-ticket personal loans book.

Motilal Oswal Financial Services expects the company to have made provisions of INR 1.64 billion in Oct-Dec. As Poonawalla Fincorp made a large provision in Jul-Sept, Motilal Oswal said, "Commentaries on growth in personal loans, margin, and asset quality/credit costs are the key monitorables." Nirmal Bang Equities expects the firm's credit cost to rise to 1.1%, up 124 basis points on year.

As on Sept. 30, the net non-performing asset ratio of Poonawalla Fincorp was flat on quarter, but fell 39 basis points on year to 0.33%. The gross NPA ratio, on the other hand, rose 74 bps on year to 2.10% as of Sept. 30. Sequentially, the gross NPA rose 143 bps on higher slippages in small-ticket personal loan portfolio, Poonawalla Fincorp had said.

Poonawalla Fincorp's net interest income is seen rising 26% on year and 10.6% on quarter to INR 6.18 billion in Oct-Dec, according to the average of estimates from the four brokerage firms.

Nirmal Bang expects cost-to-income ratio of the non-bank finance firm to rise to 56% from 36.3% a year ago. However, it is seen declining from 56.7% in Jul-Sept. Motilal Oswal has pegged the cost-to-income ratio for Oct-Dec at 46.5%.

As per the company's provisional figures, Poonawalla Fincorp reported total disbursements of INR 71.50 billion in Oct-Dec. The provisional figures also showed the company's assets under management grew 41% on year and 9% on quarter to INR 309.50 billion as of Dec. 31. The company will announce the Oct-Dec earnings on Friday.

Since last quarter's earnings, shares of Poonawalla Fincorp have risen 6%. On Wednesday, the shares ended at INR 314.90 on the National Stock Exchange, up 2% from the previous close.

Following are the Oct-Dec earnings estimates for Poonawalla Fincorp based on reports from four brokerage firms in descending order by the estimate of net profit:

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Edited by Subhojit Sarkar

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