CARE Rating reaffirms Poonawalla Fincorp's LT rating at 'AAA' with 'stable' outlook

Poonawalla Fincorp said that CARE Rating has reaffirmed the company's long-term rating at 'CARE AAA' with 'stable' outlook.

The agency has also affirmed the companys short-term rating at CARE A1+.

CARE Rating stated that the Rating reaffirmations to various debt instruments of Poonawalla Fincorp Limited (PFL) continue to factor in the expectation of strong support from the Cyrus Poonawalla group, having a healthy financial flexibility, which is also reflected from the fact that PFL has been able to raise incremental funds at competitive rates in the debt market.

The ratings also factor in the changes in the senior management team including the appointment of Arvind Kapil as the MD & CEO of the company along with other seasoned professionals, and revised product strategy post the change in management.

The ratings continue to factor in diversified product approach of the company in the retail segment and the companys plan to launch 6 new products under its offerings. Further, the rating factors in the healthy capitalization and improvement in the overall resource base.

CARE Ratings has taken into consideration an increase in the Gross Non-Performing Assets (GNPA) levels in the last couple of quarters, which is mainly on account of stress witnessed in the small ticket personal loan (STPL) book, for which the company made accelerated provision, which impacted the profitability in 9MFY25. However, the asset quality on overall basis remains at comfortable level.

The ratings also consider the growing, yet relatively moderate, scale with assets under management (AUM) of Rs 30,984 crore (standalone) as on 31 December 2024, as against Rs 25,003 crore as on 31 March 2024 (FY23: Rs 16,143 crore).

The ability of the company to profitably scale up the business with new product lines, while keeping asset quality under check, remains a key monitorable.

Poonawalla Fincorp is a non-deposit-taking systemically important non-banking finance company (NBFC) registered with the Reserve Bank of India (RBI). PFL has various product offerings in the consumer and small business finance segments, including digital personal loans, pre-owned car loans, digital business loans, LAP. It operates through a network of 102 branches as on 31 March 2024, across 19 states of India.

The scrip fell 1.06% to currently trade at Rs 344.25 on the BSE.

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