Poonawalla Fincorp Ltd. saw its shares jump by 8% on Monday following the announcement of robust second-quarter earnings for the fiscal year 2027. The non-banking financial company (NBFC) reported a significant surge in both net profit and revenue, prompting varied analyses from leading brokerages regarding its future outlook.
Poonawalla Fincorp Reports Stellar Q2 Growth
The company disclosed its Q2 results on October 9, 2026, revealing a dramatic increase in profitability. Net profit for the September 2026 quarter soared by an impressive 405% year-over-year, reaching Rs 374.85 crore, compared to Rs 74.20 crore in the same period last year. Revenue also experienced substantial growth, climbing 70.17% year-over-year to Rs 2624.50 crore from Rs 1542.30 crore.
Key financial highlights from the quarter include:
- Assets Under Management (AUM) stood at Rs 74,008 crore.
- Return on Assets (RoA) strengthened to 2.18%.
- Net Interest Income (NII) increased by 12.3% quarter-on-quarter, reaching Rs 1,589 crore.
- Net Interest Margins (NIMs) were reported at 9.26%.
Following the earnings release, Poonawalla Fincorp's shares rose to Rs 483.95, up from its previous close of Rs 448.05, pushing the firm's market capitalization to Rs 40,494 crore.
Brokerage Optimism from MOFSL
Brokerage firm MOFSL (Motilal Oswal Financial Services) maintained a "BUY" rating on Poonawalla Fincorp, projecting a target price of Rs 570, which implies a potential 27% upside from current levels. MOFSL highlighted several factors expected to drive the company's earnings and profitability over the medium term:
- Higher yields and a favorable product mix.
- Anticipated falling credit costs.
- Gradual moderation in the operating expenditure-to-AUM ratio.
- Healthy AUM growth momentum and operating leverage.
MOFSL also revised its FY27/FY28 EPS estimates upwards by approximately 3% each, primarily due to expectations of a stronger expansion in Net Interest Margins (NIMs). The brokerage models a 44% AUM CAGR and 120% PAT CAGR (Compound Annual Growth Rate) over FY26-FY28E, expecting Poonawalla Fincorp to achieve RoA/RoE of 2.4%/~17% by FY28E.
Nirmal Bang's Cautious Stance
In contrast, another brokerage, Nirmal Bang, maintained a "HOLD" stance on Poonawalla Fincorp's stock, setting an unchanged target price of Rs 480, suggesting a more modest 7% upside. While acknowledging the company's strong Q2 performance, rapid AUM expansion, and improving RoA, Nirmal Bang expressed caution regarding the seasoning of the loan book.
"While the company has delivered rapid AUM expansion and an improving RoA of 2.18%, a substantial portion of the aggressively scaled book remains unseasoned, making multi-year vintage stability across newer product lines a critical watch factor," Nirmal Bang stated. "We continue to maintain our cautious stance and maintain HOLD with an unchanged TP of Rs 480."
This perspective underscores the importance of observing how the newer product lines perform over an extended period to assess their long-term stability and impact on the company's overall financial health.