POONAWALLA Q2 FY26 earnings call.
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What the record says.
Poonawalla Fincorp delivered a robust Q2 FY26 with AUM at INR 47,701 crore (68% YoY, 15.6% QoQ), driven by aggressive multi-product expansion across seven new businesses. Asset quality showed meaningful improvement—G NPA compressed 26 bps to 1.59% while absolute GNPA remained flat at INR 711 crore despite significant book growth. Stage 1 assets reached 97.1%, reflecting strengthened underwriting. Credit cost remained elevated at 2.67% due to new business scaling, though the calibrated instant loan book showed 70% improvement in first EMI bounce rates. The company raised INR 23,555 crore in secured NCDs during Q2, reducing cost of borrowing by 35 bps to 7.69% and increasing NCD share to ~27% of borrowings. PAT of INR 74 crore reflects intentional investment phase in branches (160 Gold branches, targeting 400 by March 2026), technology, and AI (45 projects, 16 live). New product disbursements reached 17% of total in Q2 vs 11% in Q1. Risk: execution complexity across seven simultaneous business launches and normalization of STPL book credit costs remain key watchpoints.
Colored figures show movement against the previous available record.
Guidance to track
- Targeting 400 Gold Loan branches by March 2026, with 95% in tier-2 and tier-3 markets as multi-product distribution points, growing from current 160 branches.
- Confident to reach 12,000 dealership distribution points by end of FY2026 from current 10,000+, significantly ahead of initial expectations.
- NCD share in borrowing mix has increased from 7% (March 2025) to ~27% (September 2025) and heading towards 30-35% steady state, improving cost of borrowing and liability diversification.
- Stated objective to achieve best-in-class credit costs in the industry through calibration of new product mix, with normalized STPL book at ~2% of AUM and improved collection efficiency.
Risks flagged
- Company is scaling seven new businesses (Gold Loans, Commercial Vehicles, Education Loans, Consumer Durables, Shopkeeper Loans, Business Loans, PL Prime) simultaneously, each at different stages of maturity, creating operational complexity and potential miscalibration.
- Quarterly credit cost remained at 2.67% vs 2.61% in Q1, and annualized credit cost for core 12 products at 1.51%. Management expects improvement only as new products gain 'adequate composition' in the mix—timeline unspecified.
- Shopkeeper Loans are 'undergoing targeted calibration to achieve desired risk benchmarks over a couple of quarters'—meaning this business line is not yet contributing positively and requires additional time before scaling.
- Stage 1 assets at 97.1% and stable G NPA in absolute terms partly reflect new business vintage. As books season, NPA could increase before normalizing. Analyst raised questions on PD/LGD methodology for new products without established track record.
Key quotes
- We've launched around six, seven businesses. They will pick up scale in different proportions over years. You will have the same calibration playing in the range of 1.5%-2% as the new product contribution gets more representative insights.
- The worst is behind us. We are excited as we look into the future quarters.
- This will be a very strong sense, not just as a strength in terms of drop in borrowing cost. It also adds a lot of stability from a risk management on the liability side because you start developing that market in terms of long-term funding.
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