Poonawalla Fincorp net profit jumps 118 pc on higher loan growth, margins

Poonawalla Fincorp on Wednesday reported a 118 per cent rise in consolidated net profit at Rs 141 crore in the April-June quarter on strong loan disbursements and improved margins.

The income rose to Rs 572 crore in the reporting quarter from Rs 483 crore in the year-ago period, Poonawalla Fincorp, which completed a year of merger with Magma Fincorp, said in a regulatory filing.

Net interest margin -- which is interest gained after paying interest on funds --stood at 9.5 per cent, up 155 basis points (bps) year-on-year, while assets under management rose 22.4 per cent to Rs 17,660 crore as new advances increased by 27 per cent to Rs 2,738 crore, said the company, a financial services arm of the Poonawalla Group which is popular as the world's largest Covid vaccine maker under the flagship Serum Institute of India.

Managing director Abhay Bhutada told PTI that of the total assets, 76 per cent are secured loans and the rest are unsecured.

After merging the larger Magma Fincorp last June, the company had written of over Rs 700 crore of legacy dud loans, he said, adding bad loans from Magma assets have all been provided for or written off.

After the write-offs, gross bad loan assets came down to 2.19 per cent in June from 5.38 per cent and net NPAs to 0.95 per cent from 2.71 per cent with provision coverage ratio of 57 per cent.

The Pune-based non-banking finance company is focused on consumer and MSME finance.

On the professional loan segment that taps doctors, lawyers and chartered accountants, he said, the monthly fresh loan disbursal under this category is more than Rs 100 crore and the total book is over Rs 1,200 crore now.

The company maintains a strong liquidity position with surplus of Rs 4,654 crore, he said, adding, the repricing of all eligible term loans and new borrowing at competitive rates have resulted in further bringing down the average cost of borrowing to 6.9 per cent from 7.4 per cent.

Bhutada said the company is now on a growth phase and expects 30 per cent incremental loan sales this year to close the year with loan book of around Rs 22,000 crore, from Rs 16,580 crore in March 2022. Stock of the company closed at Rs 271.95 apiece on BSE, up 3.50 per cent from previous close.