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Informist, Friday, Jul. 25, 2025

By Ketaki Patil and Shravani Chandiwade

MUMBAI – Poonawalla Fincorp. will open 400 new gold loan branches and these are expected to deliver a 4% return on investment, the company told analysts in a post-earnings conference call Friday. The company is focussing on building its digital infrastructure and outreach, which it expects will help boost growth in the medium term.

The company expects its credit costs to stabilise at 1.5% when operational expenses normalise; these are currently high due to investments in digital initiatives and new launches. "While everyone is building the top of their physical footprint, let me tell you that we are not just building the footprint, we're also accelerating our digital reach. It's being achieved by building best-in-class digital marketing capabilities", an official said. 

The digital solution launched in the current quarter is expected to provide a smooth customer on-boarding experience. The company's app installation has grown 10-fold in the past three months.

The company's digital instant sanction education loan initiative has sanctioned loans of INR 560 million in June. This comes after the successful launch of its education loan product in March, which has seen over 9,000 loan files booked, indicating strong market demand. The company said it is also enhancing its risk assessment capabilities with the implementation of AI-driven risk analytics.

Poonawalla Fincorp said 63% of its micro, small, and medium enterprises portfolio is secured, and all such companies have been extremely well calibrated on the risk side. The newly launched business of commercial vehicle loans has disbursed INR 920 million of loans.

To a question about whether 80% of the short-term personal loan portfolio was clean and the remaining 20% would be written off, perhaps gradually, the company said it wanted to be conservative on the issue and would want to be watchful till the issue was fully resolved. Several non-bank finance companies had built large portfolios of personal and other unsecured loans across the last few years. After the Reserve Bank of India tightened capital adequacy rules for such loans in mid-2024, most lenders are pruning their exposure to such unsecured loans.

The company has received a significant boost by way of an INR 15 billion investment from its promoter. This infusion of capital is expected to support company's strategic financial planning. The company aims to maintain a debt-to-equity ratio of around 4.75 to 5, as this will support healthy return on equity in three years.

While return on equity projections were not provided for the next two years, the company's guidance for June 2028 is an ROE of 3-3.5%. The management indicated a preference for conservative guidance and outperformance of internal targets, a trend they noted has been evident over the past four quarters.  End

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

Edited by Deepshikha Bhardwaj

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