Non-banking financial company Poonawalla Fincorp Ltd delivered exceptional financial performance in Q2FY27, with net profit surging over fivefold to ₹375 crore compared with ₹74 crore in the corresponding quarter last year. According to reports from The Economic Times and Business Standard, the company also reported profit after tax (PAT) of ₹375 crore in Q2FY27, marking a 21.8% quarter-on-quarter increase from ₹308 crore in Q1FY27. The strong profitability was driven by robust operational metrics and improved asset quality, with the company posting total income surging 75.6% year-on-year to ₹2,625 crore from ₹1,543 crore in the previous year. Poonawalla Fincorp shares jumped 8% in early trade today, before giving up some gains, reflecting strong investor confidence in the results. As per The Financial Express, the stock was trading at ₹462.90 per share, with brokerages seeing significant upside potential. However, the stock pared gains in the second half of Monday's trading session as the initial euphoria over the company's Q2 results faded, with the stock trading 0.64% higher at ₹450.90 per share on BSE at 2:40 pm.
The company's net interest income (NII) rose 75.6% year-on-year to ₹1,589 crore from ₹764 crore in Q2FY26, as reported by The Economic Times. Cross-sell income increased significantly to ₹118 crore from ₹68 crore, while servicing income rose to ₹91 crore from ₹37 crore in the year-ago period. Total interest income increased 72.3% YoY to ₹2,416 crore in the quarter, compared with ₹1,402 crore in the year-ago period, while interest expenses rose 62.2% YoY to ₹1,035 crore from ₹638 crore. Operating profit surged 126.6% YoY to ₹877 crore in Q2FY27, compared with ₹387 crore in the corresponding quarter last year, while operating expenses climbed 37.5% YoY to ₹712 crore from ₹518 crore. Assets under management (AUM) stood at ₹74,008 crore, registering a 55% year-on-year increase from ₹47,701 crore in September 2025. Net interest margin (NIM) improved by 16 basis points quarter-on-quarter to 9.26% from 9.10%, with net interest income including fees and other income rising 12.3% sequentially. Management indicated that the minor sequential increase remains within the guided range, while operating leverage is expected to improve structurally over the next two years.
The company demonstrated significant diversification in its product portfolio, with new products including prime personal loans, gold loans, education loans, consumer durable loans, commercial vehicle loans and shopkeeper loans accounting for 28% of second-quarter disbursements. As reported by The Economic Times, the newer businesses disbursed more than ₹4,400 crore during the quarter, showcasing the company's successful expansion into multiple lending verticals. Managing Director and CEO Arvind Kapil highlighted the expansion of the commercial vehicle business to more than 1,250 channel partners, the strengthening of education-loan origination through an instant-sanction platform, and the scaling of the consumer durable network to 20,000 dealers across 360 locations. The diversification strategy has enabled the company to reduce concentration risk while capturing growth opportunities across different customer segments. Motilal Oswal underlined NIM expansion and lower credit costs of the company, noting that the growing contribution of new products continues to support yield improvement and NIM expansion, while strong underwriting and collection practices have driven a sequential moderation in credit costs.
Asset quality showed significant improvement during the quarter, with gross non-performing assets (GNPA) declining to 1.20% from 1.6% in September 2025, as reported by The Economic Times. Net non-performing assets (NNPA) also declined to 0.61% from 0.81%, while credit cost as a percentage of average AUM eased to 2.19% from 2.40%. The company reported no accelerated write-offs during the quarter. Return on assets (ROA) stood at 2.18%, improving from 1.98% in the previous quarter. Stage 1 assets accounted for 97.9% of the on-book loan portfolio, marginally higher than 97.6% in the previous quarter, reflecting the continued strength of the company's loan book. The secured-to-unsecured on-book portfolio mix stood at 52:48 as of September 2026, compared to 56:44 in September 2025. Management shared that 90+ dpd at 6 and 12 MOB for recent originations is 53% better, indicating stronger early vintage credit performance and sustained improvement in portfolio quality.
Motilal Oswal has maintained a 'buy' rating on the stock with a target price of ₹570 in its research report dated October 10, 2026, raising the target from previous estimates. The brokerage noted that the stock currently trades at 2.3x FY28E P/BV and expects PFL to deliver RoA/RoE of 2.4%/~17% in FY28E. Motilal Oswal raised FY27/FY28 EPS estimates by ~3% each to factor in slightly higher NIM, expecting NIM to expand 7.7% in FY27, and 7.9% in FY28, including the benefit of primary equity capital raised at the beginning of FY27. Motilal Oswal gave a 'Buy' rating for the stock with a target price of ₹570 per share, stating that "We model ~44% AUM CAGR and ~120% PAT CAGR over FY26-FY28E" and reiterating their BUY rating with a target price of ₹570 based on 2.7x Sep'28E BVPS. However, Emkay Global maintained its 'reduce' rating with a target price of ₹410 per share, implying an upside of nearly 21%, noting that the stock price has corrected 5-9% over the last one-two months leading to correction in current valuation to 2.2x of FY28E. Emkay maintained its 'reduce' rating with a target price of ₹410 per share, stating that "Factoring in 2Q performance, we tweak our FY27-29 estimates marginally; this leads to EPS estimates increasing by 1-2% over FY27-29" and maintaining Sep-27E TP of ₹410, assuming an equity raise of ₹30bn in FY28E at ₹450/share.
