Poonawalla Fincorp looking to exceed AUM of Rs 21,000 crore by FY23

The Poonawalla Fincorp AUM was flat at Rs 15,228 crore at the end of December 2021 against Rs 15,006 crore in December 2020

After seeing flat growth in assets under management (AUM) till Q3FY22, Poonawalla Fincorp (PFL) expects to increase the monthly disbursement of loans from around Rs 600 crore now to Rs 1,000 crore till March 2023.

It is looking to cross AUM of Rs 21,000 crore by the end of FY23. Thereafter, it plans to expand the book at a compound annual growth rate (CAGR) of 30-32 per cent.

The company's AUM was flat at Rs 15,228 crore at the end of December 2021 against Rs 15,006 crore in December 2020. It was Rs 15,275 crore in September 2021.

On the flat growth in assets, the company said the consolidated AUM consists of certain discontinued loan products. This did not allow a significant ramp up in the initial year or so.

It discontinued some products as they involved high cash collections, high opex and high credit costs. The rundown in that book offsets the growth seen in the continued or focused product lines, PFL said in response to queries from Business Standard.

It still has almost Rs 3,600 crore of loans, which will continue to run down. The growth was seen across all focused product lines, including pre-owned cars, affordable housing, personal loans and business loans.

The rate of disbursement is about 55 to 60 per cent and will be scaled up to almost 80 per cent by March 2022. The company expects AUM to be over Rs 40,000 crore after three years.

As for asset quality, it has seen consistently healthy collections across the portfolio in Q2 and Q3 of FY22. This helped to bring down the gross non-performing assets (NPAs). Gross NPAs declined from 6.9 per cent in December 2020 to 4.1 per cent in September 2021 and further to 3.5 per cent in December 2021.

The company expects net NPAs to settle below 1.5 per cent by March 2022 from 1.8 per cent in December 2021. Net NPAs were at 4.5 per cent in December 2020 and 2 per cent in September 2021.

In the current financial year, the Pune-based finance company has seen makeover at the board level as well as in senior management.

Managing Director Abhay Bhutada was re-instated last week after the Board found that an independent probe did not find evidence of him sharing any unpublished price-sensitive information with a third party. He had resigned in September 2021 after the Securities and Exchange Board of India (Sebi) barred him from accessing the securities market for allegedly insider trading in shares of PFL.

In January 2021, PFL strengthened its board by inducting two independent directors – Sanjay Kumar, a Bank of Baroda former executive, and G. Jagan Mohan Rao, Reserve Bank of India former official – on its board.