Poonawalla Fincorp Limited: history, ownership, mission, how it works & makes money

A Brief History of Poonawalla Fincorp Limited

Poonawalla Fincorp Limited, previously known as Poonawalla Housing Finance Limited, was established in 1992 as a subsidiary of the Poonawalla Group, primarily focused on housing finance.

In 2020, Poonawalla Fincorp underwent a rebranding to diversify its financial services beyond housing finance. The company shifted its strategy to encompass a wider range of financial products, including personal loans, business loans, and vehicle finance.

As of March 31, 2022, the company reported a net profit of ₹185 crore, reflecting a substantial increase from the previous year’s profit of ₹48 crore.

The company’s assets under management (AUM) grew to approximately ₹6,745 crore in FY2022, marking a growth of around 45% year-on-year.

Poonawalla Fincorp’s total income for FY2022 stood at ₹1,068 crore, compared to ₹627 crore for FY2021, showing an impressive growth trajectory.

On the funding side, Poonawalla Fincorp raised approximately ₹1,000 crore through a combination of equity and debt in 2021 to strengthen its capital base and support its expansion plans.

The company has been focusing on technology adoption and digital platforms to streamline its offerings and enhance customer experience. As of recent reports, around 70% of its loan disbursals were conducted digitally.

The following table summarizes key financial metrics over the last few years:

As part of its strategy, Poonawalla Fincorp is also upgrading its risk management framework to enhance credit assessment capabilities, aiming to reduce non-performing assets (NPAs). The company reported an NPA ratio of 3.5% as of March 2022, a significant improvement from 5.2% in March 2021.

In addition to this, Poonawalla Fincorp has expanded its branch network significantly, with over 300 branches across India by the end of FY2022, up from approximately 200 branches in FY2021.

The organization has also aligned with various digital marketing initiatives to improve brand visibility and attract new customers. Its efforts have led to a customer base growth of more than 60% over the past year, emphasizing the effectiveness of its strategic pivot.

A Who Owns Poonawalla Fincorp Limited

Poonawalla Fincorp Limited, previously known as Magma Fincorp, is a non-banking financial company (NBFC) based in India. The ownership structure of Poonawalla Fincorp is characterized by a concentrated stake held by specific shareholders, with key individuals and entities significantly influencing the company's direction.

As of October 2023, here is the breakdown of the ownership percentages:

The Poonawalla Group, led by the prominent entrepreneur Cyrus Poonawalla, is the primary stakeholder. This group is well-known for its involvement in the healthcare sector, particularly through the Serum Institute of India, which is the world’s largest vaccine manufacturer by doses produced. In Poonawalla Fincorp, the Group's significant stake underscores their strategic commitment to expanding the financial services segment of their business portfolio.

Public shareholding, which constitutes approximately 30.8% of the total shares, includes both retail and institutional investors. This diverse ownership provides liquidity and encourages market participation. Notably, the company's shares are listed on the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE), fostering wider investor engagement.

Foreign Institutional Investors hold around 7.5% of the company, reflecting the increasing appeal of Indian financial services in the international market. The interest from FIIs is indicative of Poonawalla Fincorp's growth trajectory and its potential for attractive returns in a booming Indian economy.

The company has pursued various growth strategies, including expanding its product offerings and enhancing its digital platforms. This focus on innovation is expected to attract more investors and increase ownership diversity over time.

As of the latest fiscal year, Poonawalla Fincorp reported a Total Assets Under Management (AUM) of approximately ₹18,000 crores (around $2.4 billion), signifying the company's robust position in the NBFC sector.

In terms of financial performance, the company reported a Net Profit of ₹500 crores for the fiscal year ending March 2023, a significant increase from the previous year, highlighting the effectiveness of its strategic initiatives and ownership structure.

The governance structure reflects a strong alignment with shareholder interests, where the Poonawalla Group plays an active role in the management and operational decision-making processes of Poonawalla Fincorp. Their management team comprises experienced professionals from various sectors, contributing to the company’s overall effectiveness in navigating the financial landscape.

Poonawalla Fincorp Limited Mission Statement

Poonawalla Fincorp Limited aims to provide innovative financial solutions to empower individuals and businesses across India. The company focuses on offering customer-centric products and a seamless digital experience, enhancing financial inclusion and driving sustainable growth.

The mission statement emphasizes the commitment to ethical practices, excellence in service, and the fostering of long-term relationships with customers. Poonawalla Fincorp seeks to leverage technology to streamline processes and deliver efficient financial products while ensuring transparency and accountability.

The company also aims to address the diverse financial needs of its customer base, including personal loans, business loans, and other financial services. Poonawalla Fincorp is dedicated to creating a culture of innovation, allowing it to adapt to the changing financial landscape and customer expectations.

As part of its mission, Poonawalla Fincorp has reported a growth in its digital penetration, with over **60%** of its loan applications being processed online as of the second quarter of FY 2024. The company continues to invest in technology to improve user experience, reduce turnaround times, and enhance service delivery.

In line with its mission, Poonawalla Fincorp has also made significant strides toward social responsibility, contributing to various community initiatives, including education and healthcare, impacting over **1 million** lives as of FY 2023. This commitment to societal well-being underpins the company's vision of sustainable progress alongside financial growth.

How Poonawalla Fincorp Limited Works

Poonawalla Fincorp Limited operates primarily in the financial services industry, offering a range of products that includes personal loans, business loans, and vehicle financing. The company's strategic focus lies in catering to the underserved sectors of the market, particularly in India.

As of the financial year 2022-2023, Poonawalla Fincorp reported total assets amounting to ₹12,133 crore. This reflects a growth trend driven by aggressive lending and expansion into new customer segments.

For the financial year ending March 31, 2023, the company achieved a net profit of ₹1,041 crore, representing a remarkable increase of 38% compared to the previous financial year. This robust profit growth can be attributed to improved operational efficiencies and a higher volume of disbursed loans.

The company's loan book stood at ₹8,535 crore as of March 31, 2023, with a 25% year-on-year growth rate. Personal loans dominated this segment, accounting for around 65% of total loans, followed by vehicle loans and small business financing.

Poonawalla Fincorp's capital adequacy ratio (CAR) was recorded at 21% for the financial year 2022-2023, significantly above the regulatory minimum requirement of 15%. This positions the company well for future growth and risk management.

The company operates a diversified distribution network consisting of over 350 branches and a digital platform that enhances its reach to customers. By leveraging technology, Poonawalla Fincorp aims to streamline the application process and improve customer engagement.

Poonawalla Fincorp is also focused on enhancing its asset quality. As of March 31, 2023, the company's gross non-performing assets (GNPA) ratio stood at 2.5%, a significant improvement from 3.2% in the previous fiscal. This reduction indicates effective collection strategies and risk management practices.

The company's interest income for FY 2022-2023 was reported at ₹3,200 crore, representing an increase from ₹2,450 crore in FY 2021-2022—a growth rate of 30%.

Poonawalla Fincorp has made substantial investments in technology, focusing on digital transformation to enhance customer experience. The digital loans segment has seen a substantial uptick, contributing to approximately 25% of total disbursements.

Market capitalization for Poonawalla Fincorp as of October 2023 stands at approximately ₹12,000 crore, reflecting a robust performance in line with sector trends.

In the competitive landscape, Poonawalla Fincorp is positioned favorably among its peers, capitalizing on market growth opportunities and addressing the financial needs of a diverse clientele, which includes both retail and small enterprise customers.

How Poonawalla Fincorp Limited Makes Money

Poonawalla Fincorp Limited generates revenue primarily through its various lending products, which include personal loans, vehicle loans, and business loans. The company operates in the financial services sector and focuses on retail lending.

As of Q2 FY2023, Poonawalla Fincorp reported a total income of ₹1,157 crore, reflecting a year-on-year growth of **19%** from ₹973 crore in Q2 FY2022.

The major segments of revenue generation are detailed in the following table:

Poonawalla Fincorp’s net profit for Q2 FY2023 stood at ₹166 crore, a significant increase of **30%** from ₹128 crore in Q2 FY2022. The increase in profit can be attributed to a reduced cost of borrowing and improved asset quality.

In terms of loan book size, Poonawalla Fincorp has experienced growth. As of September 2023, the total loan book reached **₹11,500 crore**, up from **₹9,700 crore** as of September 2022, indicating a growth of **18.5%** year-on-year.

Moreover, the company reported a Gross NPA (Non-Performing Assets) ratio of **1.8%** as of Q2 FY2023, improved from **2.2%** in the previous year. This decline in NPA levels suggests better risk management and collections.

Poonawalla Fincorp leverages a diversified funding mix, comprising bank borrowings, NCDs (Non-Convertible Debentures), and securitization. In FY2023, **₹4,500 crore** was raised through various funding sources, allowing the company to expand its lending capabilities while maintaining competitive interest rates for borrowers.

The company’s operating expenses have also been under control, with a cost-to-income ratio of **40%** as of Q2 FY2023, compared to **45%** the previous year. This efficiency supports higher profitability margins.

In the competitive landscape, Poonawalla Fincorp's strategic partnership with the Poonawalla Group provides advantages in terms of brand recognition and access to a broader customer base, further enhancing revenue opportunities.

Through a combination of diverse lending products, effective cost management, and strong asset quality, Poonawalla Fincorp Limited continues to strengthen its financial position and profitability in the Indian lending market.