Poonawalla Fincorp gains after Q2 PAT spurts 151% YoY

Poonawalla Fincorp rose 1.70% to Rs 167.25 after the company's consolidated net profit surged 151.01% to Rs 95.51 crore on 15.01% decline in net sales to Rs 515.34 crore in Q2 September 2021 over Q2 September 2020.

Profit before tax (PBT) surged 150.76% to Rs 126.46 crore in Q2 September 2021 over Q2 September 2020, driven largely by reduction in interest expenses and credit costs.

Assets Under Management (AUM) grew by about 6% QoQ to Rs 15,275 crore. NIM increased by 104 bps YoY to 9.1% in Q2FY22 (8% in Q2FY21), driven largely by reduction in interest expenses.

Collections showed an improving trend from 93.1% in June 2021 to 98% in July 2021 and further to 99.9% in September 2021.

Consequent to improvement in collections in Q2FY22, Gross Stage 3 and Net Stage 3 assets decreased from 5.4% and 2.7% respectively as at June 2021 to 4.1% and 2.0% respectively as at September 2021 on a consolidated basis. The company has one of the best provision coverage ratios across all three stages. Standard asset coverage ratio as at September 2021 stands at 3.4% (3% in September 2020); Stage 3 asset coverage ratio stands at 52% (38% in September 2020).

The company continues to maintain a strong liquidity position with around Rs 1,700 crore of surplus liquidity, with additional term loan sanctions in hand of Rs 1750 crore. Significant amount of existing loans were repriced in Q2FY22, with reduction of over 120 bps. New sanctions received at sub-6.5%.

The company's long-term rating was upgraded by two notches to 'AA+; Stable' by Care Ratings following its review process. The short-term rating was retained at the highest level of 'A1+'.

Poonawalla Fincorp (earlier known as Magma Fincorp) is a Cyrus Poonawalla group promoted NBFC-ND-SI that focuses on consumer and small business financing. The company's financial services offerings include pre-owned car finance, personal loans, loan to professionals, business loans, SME LAP, affordable home loans and general insurance. The company operates through 285 branches across 21 states, focusing on the urban and semi-urban geographies.

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