Global brokerage firm Jefferies has initiated coverage on Poonawalla Fincorp Ltd. with a 'Buy' rating and a price target of ₹490 per share. According to reports from CNBC TV18, The Economic Times, and Business Standard, the target price implies a potential upside of nearly 23% from the stock's current market levels. The brokerage expects the company to deliver assets under management (AUM) growth at a CAGR of 33% over the coming years, which would be the fastest among major non-banking financial companies (NBFCs). As per Business Standard, the analysts expect PFL to deliver a 33% AUM CAGR - the fastest among major NBFCs - aided by better loan mix, improved net interest margins (NIMs), and lower credit costs driven by reduced slippages and portfolio diversification.
The brokerage highlighted the company's ongoing strategic transformation under CEO Arvind Kapil, former head of retail and mortgage banking at HDFC Bank, as a key positive factor. As reported by The Economic Times and Business Standard, the leadership overhaul has seen seven of nine CXOs coming from HDFC Bank, alongside the launch of six new products including prime personal loans, commercial vehicle loans, gold loans and education loans. These new segments have already scaled to 14% of AUM within a year and are expected to contribute 34% of AUM over time. The company is being repositioned under this leadership team, with backed investments in distribution, collections and tech/AI, AAA rating and Adar Poonawalla Group parentage, supporting the new product AUM reaching 34% of AUM and overall AUM growth at 33% CAGR over FY26-29E.
Jefferies projects significant improvements in the company's financial metrics, with return on assets (ROA) and return on equity (ROE) projected to expand to 16% by FY29 from around 6% in FY26. As reported by The Economic Times and Business Standard, the brokerage expects net interest margins (NIMs) to improve by around 70 basis points over FY26-29, aided by growth in higher-yielding products such as prime personal loans and gold loans. The company's profit after tax is forecast to surge to ₹2,900 crore by FY29 from ₹540 crore in FY26, while cost-to-AUM is expected to improve to 3.9% by FY29 from 4.4% in FY26 on the back of operating leverage. According to Business Standard, the brokerage expects PAT to rise to ₹2,900 crore from low FY26 base of ₹540 crore with RoA/RoE improving to 2.3%/16% in FY29 from 1.1%/6% in FY26, with estimates below management's RoA target of 3.0–3.5% by Jun-28, leaving upside if execution surprises positively.
Asset quality trends have strengthened significantly, with gross NPAs declining to 1.4% from 1.8% in FY25, supported by tighter underwriting and the reduction of the stressed legacy personal loan book. As reported by The Economic Times and Business Standard, delinquency levels in loans originated after September 2024 are running about 50% lower than the previous 12-month cohort. The brokerage expects credit costs to moderate to 2.2% over FY26-29 from 2.7% in FY26, driven by better portfolio quality and a growing share of lower-risk products such as gold and education loans. These improvements are expected to support the company's AAA credit rating and backing from the Adar Poonawalla Group. The company's Tier-1 capital ratio has risen above 19.5% following a ₹2,500 crore capital raise in April 2026, providing ample room to fund growth.
According to The Economic Times and Business Standard, shares of Poonawalla Fincorp were down 0.60% to ₹396.90 in Thursday's session, following a 1.8% decline in the previous session. At the current market price, Jefferies sees an upside of 16.59% and has set a target price of ₹490 per share. Despite the recent volatility, the stock has declined nearly 18% so far in 2026. According to analyst consensus data reported by CNBC TV18, 10 analysts currently track the stock, with five having a 'Buy' rating, one recommending 'Hold', while four maintain a 'Sell' call. The brokerage believes the company is well-positioned to benefit from its revamped leadership team, expanding product portfolio, growing distribution network, and strengthened underwriting practices, supporting the stock's premium valuation multiples despite trading at 2.4x FY27 estimated book value and 25x FY27 estimated earnings. As per Business Standard, PFL trades at 2.4x FY27E book value (25x FY27E PE), below its post-Poonawalla acquisition average of 3.1x book value, but at the upper end of diversified AAA-rated NBFC peers.
