| Q3 FY26 Earnings Conference Call
Summary : Poonawalla Fincorp reported strong Q3FY26 growth with improved asset quality, driven by new product scaling, AI adoption, and a strategic shift towards a lower-risk, diversified portfolio, maintaining a positive outlook.
Management Perspective positive : "Our AUM... is growing at around 77.6% year-on-year.""New products delivered at 25% quarter-on-quarter disbursement growth, demonstrating a tangible momentum.""GNPA for Q3FY26 stands now at 1.51% versus a 1.59% in Q2FY26. It is a drop of another eight basis points here.""Operating leverage is beginning to come through.""We are very excited from here on."
Concall Report Analysis & Insights
Business Overview
- AUM grew 77.6% YoY, 15.3% QoQ to ₹55,017 crores.
- Total disbursements grew 84% YoY, 6.5% QoQ in Q3FY26.
- Net interest margin (including fees) increased to 8.62% in Q3FY26.
- GNPA improved to 1.51% from 1.59% QoQ; Stage-1 assets rose to 97.4%.
- Cost of borrowing reduced to 7.65% in Q3FY26 from 8.04% in Q1FY26.
- Profit after tax grew 102% QoQ and 702% YoY to ₹150 crores.
Future Growth Prospects
- Aim to achieve best-in-class credit costs with a balanced portfolio mix.
- New businesses are expected to scale up in different proportions.
- Gold, education, personal loans, and LAP to comprise 50-60% of AUM.
- Launching a next-gen conversational AI platform for customer service.
- Targeting 30-35% NCDs in total borrowings for stable funding.
- Overall AUM growth guidance of 35-40% for retail products.
Management Insights
- Building a high-quality, stable, low-volatile credit portfolio.
- Growth is a means to compound intrinsic value, not an objective.
- Focus on sustainable, healthy ROAs through disciplined underwriting.
- Operating leverage is structurally embedded, absorbing incremental growth.
- AI initiatives amplify strength, reducing manual effort and improving decisioning.
- Adopting a credit-first, compliance-first approach with disciplined execution.
Signs of Skepticism
- Management's explanation for PCR reduction due to product mix and old STPL rundown.
- Vague timeline for the capital raise, despite board approval for 12 months.
Risk Factors
- Fluctuations in earnings and ability to manage rapid growth.
- Competition and general economic conditions in India and abroad.
- Changes in law, rules, and regulations affecting operations.
- Challenges in attracting and retaining skilled professionals.
- Impact of government policies and actions.
Good To Know
- India's real GDP grew 8.2% in Q2 FY2025-26.
- CPI inflation softened to 1.33% in December 2025.
- Financial conditions remain supportive with robust credit growth.
- Board approved ₹5,500 crores cash equity raise, with a 12-month enabling approval.
Key Drivers
- Strong AUM growth continues.
- New products scaling well.
- AI initiatives boost efficiency.
- Asset quality improving steadily.
Key Analyst Discussions
Financial Highlights
- Analyst questioned the reduction in provision coverage ratio for Stage-1, 2, 3 assets.
- Management explained PCR reduction by product mix change and old STPL rundown.
- Write-off policy for unsecured products is 180 DPD, vehicle secured is 365 DPD.
- Management reiterated AUM growth guidance of 35-40% for retail products.
Product Composition
- Analyst inquired about new product disbursement targets in overall AUM mix.
- Management stated focus on gold loan branches, with cross-sell benefits.
- Gold loan branch expansion strategy prioritizes Western India first.
- Consumer durable dealer presence is strong in Tier-II/III cities.
- Credit cost reduction is primarily driven by product mix improvement.
Strategic Considerations
- Analyst asked about the timeline for the approved capital raise.
- Management confirmed a 12-month approval, but no specific timeline for capital raise.
- Management discussed balancing short, medium, and long tenure products in the book.
- Management expects operating leverage trend to continue, improving cost-to-income ratio.