'Sell' Poonawalla Fincorp Shares Maintains Nirmal Bang Post Q1 Results; Sees 9% Potential Downside

Poonawalla Fincorp has undergone a senior management change, with a new MD and leadership team in place, and has consolidated its business lines leading to calibrated disbursement growth. The company has also streamlined its strategy around a ‘risk-first, growth-fast’ framework.

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Nirmal Bang Report

Poonawalla Fincorp Ltd.’s Q1 FY26 performance was below our estimates with net interest income/pre-provision operating profit coming in at a variation of -7%/-16%. PAT came below our estimates by -60% due to significant increase in provisions YoY (+476% YoY/-52% QoQ). However, PAT remained flat on QoQ basis.

Asset quality witnessed stability during the quarter, primarily driven by effective resolution of the erstwhile STPL portfolio.

Poonawalla Fincorp is leveraging AI-led digital journeys alongside an aggressive branch rollout (400 planned by FY26; 80 already live), especially in tier 2/3 cities, to scale up the gold loans and the consumer businesses. 

We remain watchful of the credit cost trend going forward and factor in elevated opex to support new verticals.

We roll forward our valuation to Jun-27E adjusted book value with a multiple of 3.3x, giving us a target price of Rs 376. We maintain Sell on the stock.

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