Summary
Poonawalla Fincorp Limited - Q3 FY 2025-26 Earnings Call Summary Friday, January 16, 2026, 4:00 PM IST
Event Participants
Executives 9 Arvind Kapil (MD & CEO), Harsh Kumar (CHRO & Head AI), Sanjay Miranka (CFO), Shabnum Zaman (Company Secretary), Shriram Iyer (Chief Credit & Analytics Officer), Sunil Samdani (Executive Director), Veeraraghavan Iyer (CBO Commercial), Vikas Pandey (CBO Consumer)
Analysts 4 Abhijit Tibrewal (Motilal Oswal), Agam (Agam Investments), Chintan Shah (ICICI Securities), Kaitav Shah (Anand Rathi)
Financials & KPIs
| Metric | Reported | Commentary |
|---|---|---|
| Asset Under Management (AUM) | ₹55,017 crores | +77.6% YoY, +15.3% QoQ; driven by new product scaling and robust market pull. |
| Total Disbursements | ₹12,330 crores (9M) | +84% YoY; monthly run rate for new products reached ₹950 crores in Dec 2025. |
| Net Interest Margin (including Fee/Other) | 8.62% | +22 bps QoQ; reflects disciplined pricing and impact of new product launches. |
| Gross NPA (GNPA) | 1.51% | -8 bps QoQ; improved from 1.59% in Q2FY26 due to stronger underwriting. |
| Stage-1 Assets | 97.4% | +30 bps QoQ; indicates higher efficiency and stable borrower performance. |
| Credit Cost (Quarterly) | 2.62% | Improved from 2.67% QoQ; non-instant loan products range-bound at 1.4-1.5%. |
| Cost of Borrowing | 7.65% | -39 bps over three quarters; driven by NCD mix increasing to 33%. |
| Opex-to-AUM | 4.41% | -40 bps QoQ; productivity gains despite network expansion to 320 branches. |
| Profit After Tax (PAT) | ₹150 crores | +102% QoQ, +702% YoY; reflects operating leverage and AUM growth. |
| CRAR / Tier-1 Capital | 18.17% / 17.15% | Remains healthy and comfortably above regulatory requirements. |
Geographic & Segment Commentary
- Consumer Business: Prime Personal Loans reached monthly disbursements of ₹430 crores with 70% of customers having bureau scores >750. Gold Loan disbursements doubled to ₹207 crores/month in Dec 2025, operating primarily through 192 branches in Tier-II/III markets.
- Commercial Business: Segment AUM stands at ₹33,700 crores, with Loan Against Property (LAP) contributing ₹15,100 crores (70% self-occupied properties). Direct (non-DSA) sourcing has scaled to 22% of commercial retail disbursements.
- Digital & New Products: Consumer Durable business reached 10,000+ outlets; Education Loan business logged 16,000+ files in nine months. Digital partner ecosystem now includes 38+ partners driving 42% QoQ disbursement growth.
Company-Specific & Strategic Commentary
- Operating Leverage: Management stated that the heavy lifting of upfront investments in tech and distribution (last 18 months) is complete, allowing AUM to scale without proportional cost increases.
- AI Implementation: 30 of 57 planned AI projects are live, including “BuildBuddy” for coding and “Credit AI” for underwriting. A next-gen conversational AI for 80% autonomous customer service resolution is slated for March 2026.
- Liability Management: Strategic shift to long-term funding with NCD share rising from 7% (Mar 2025) to 33% (Dec 2025). The share of variable-rate borrowing stands at 50%.
- Product Mix Transition: Long-term focus is to shift 50-60% of the portfolio toward Gold, Education, Personal Loans, and LAP to drive a structural reduction in credit costs and volatility.
Guidance & Outlook
| Metric | Guidance / Outlook | Commentary |
|---|---|---|
| AUM Growth | 35% - 40% | Management views this as a sustainable directional target in the current economy. |
| Product Mix | 50% - 60% AUM | Target share for core products (Gold, Edu, LAP, PL) to drive ROA expansion. |
| Direct Sourcing | 40% - 50% | Targeted share of total commercial retail disbursements via in-house channels. |
| Customer Service | 80% Automation | AI voice/chat bots to resolve 80% of interactions by March 2026. |
Risks & Constraints
| Risk | Context |
|---|---|
| Portfolio Mix Risk | Higher credit costs in “instant loan” segments (digitally sourced) require balancing with secured/low-risk assets. |
| Operational Risk | Scaling gold loan branches requires intense supervisory depth and control to mitigate fraud and security risks. |
| Capital Requirements | High growth (77%+) necessitates periodic capital raises; board has approved ₹5,500 crore enabling resolution. |
Q&A Highlights
Asset Quality & Provisioning
- Question: Why has PCR on Stage-3 dropped to 48% from 57% YoY? (Chintan Shah, ICICI Securities)
- Answer: The drop reflects the rundown of the old STPL book which had higher provisions and a general shift toward a higher-quality Stage-1 mix (97.4%) and lower-risk products (Shriram Iyer).
- Question: What is the write-off policy for unsecured products? (Chintan Shah, ICICI Securities)
- Answer: Unsecured loans are written off at 180 DPD; vehicle loans at 365 DPD (Sanjay Miranka).
Strategy & Credit Cost
- Question: Is the improvement in credit cost driven by seasoning or product mix? (Abhijit Tibrewal, Motilal Oswal)
- Answer: Both. Individual products are improving due to calibration and collections, but management is also optimizing the “mathematical mix” of 13 products to maximize consolidated ROA (Arvind Kapil).
- Question: What is the strategy for gold loan branch expansion? (Abhijit Tibrewal, Motilal Oswal)
- Answer: Focusing on “density pockets” in Western India (Gujarat, Maharashtra, Rajasthan) first to ensure supervisory depth before expanding to Karnataka and Odisha (Vikas Pandey/Arvind Kapil).
Financials & Operating Leverage
- Question: Is there more investment left, or has the cost-to-income peaked? (Kaitav Shah, Anand Rathi)
- Answer: The trade-off is now firmly in favor of operating leverage; while incremental investments continue, Opex as a percentage of AUM will trend downward (Arvind Kapil).
- Question: What is the asset-side duration? (Nischint Chawathe, Kotak)
- Answer: Current asset duration is 2.5 to 3 years; ALM remains positive across most buckets (Sanjay Miranka).
Key Takeaway
Poonawalla Fincorp delivered a robust Q3 FY26, characterized by 77.6% YoY AUM growth to ₹55,017 crores and a significant 102% QoQ jump in PAT to ₹150 crores. The quarter marked a strategic pivot point where the Company crossed the 1% ROA threshold, driven by the commencement of operating leverage as historical investments in tech and a 320-branch network begin to bear fruit. Management successfully diversified the liability side, increasing NCD contribution to 33% and reducing borrowing costs by 39 bps over nine months. While “instant loans” carry higher credit costs, the broader portfolio of 12 other products remains stable with credit costs between 1.4-1.5%. The strategy focuses on scaling a “credit-first” diversified book, aiming to move 50-60% of AUM into high-quality secured and prime segments. Looking ahead, the Company is positioned to sustain 35-40% growth while further optimizing ROA through AI-led efficiencies and a structural shift in the product mix.
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