Poonawalla Fincorp Ltd, a non-banking finance company (NBFC), reported a loss of ₹471 crore for the quarter ending September 30, 2024. This marks a significant drop from a profit of ₹860 crore in the same quarter last year, primarily due to a massive increase in provisions for potential losses related to its short-term personal loan (STPL) portfolio.
The company’s provisions surged 32 times to ₹910 crore from just ₹28 crore last year. Of this, ₹666 crore was specifically allocated for the STPL portfolio. Poonawalla improved its provision coverage ratio to 84.47% from 52.53% in June 2024, indicating a focus on better risk management and financial stability.
CEO Arvind Kapil stated that the company is strengthening its balance sheet for long-term growth and aims to expand its product offerings from 4 to 10 within the next 4-6 quarters. However, the results shocked investors, leading to a 17% drop in Poonawalla Fincorp’s share price, which closed at ₹298 on the BSE.
The gross non-performing assets (NPA) increased due to higher loan defaults in the STPL portfolio. Additionally, there are reports of employee dissatisfaction, with an anonymous letter criticizing Kapil’s management style and his focus on increasing staff and branches.
Despite the loss, Poonawalla Fincorp saw a 22% rise in net interest income, driven by a 40% increase in assets under management (AUM), which reached ₹28,396 crore. The AUM consists of 33% in MSME finance, 28% in personal and consumer finance, 19% in loans against property, and 15% in pre-owned car loans. The company also maintained a liquidity buffer of ₹5,710 crore.
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