Poonawalla Fincorp Q2 profit jumps 405% on AUM growth

Limited (POONAWALLA) is in focus on October 12, the first trading session after it reported a 405% year-on-year jump in Q2 FY27 net profit to ₹374.85 crore. The stock closed at ₹448.05 on Friday, before the results were announced after market hours. Assets under management (AUM) rose 55.1% year-on-year to ₹74,008 crore, and 10.4% from the June quarter. Net interest income, including fees and other income, grew 12.3% sequentially to ₹1,589 crore. Gross NPA fell to 1.20% from 1.37% in Q1, and net NPA to 0.61% from 0.70%. Return on assets rose to 2.18%. The 405% headline flatters the picture. Last year's Q2 profit was only ₹74.20 crore, so the base was very low. The 21.8% sequential profit growth from ₹307.71 crore is a better measure of the current run-rate. The quality of growth is good, though. Net interest margin plus fees expanded to 9.26%, while operating costs fell to 4.15% of average AUM from 4.81% a year ago. Credit risk is still the main watchpoint. Credit cost improved to 2.19% of average AUM, but remains high for a lender of this size. Unsecured loans make up about 48% of the book. The provision coverage ratio is only 49.14%, which leaves less cushion if bad loans rise. Fast 55% loan growth also means many loans have not yet gone through a full repayment cycle. Investors should watch credit costs, asset quality in the unsecured book, provision coverage and whether margins hold as the company scales. The key question is whether Poonawalla can keep growing above 50% without a rise in bad loans. Disclosure: I do not hold any position in Poonawalla Fincorp Limited. This post is for informational purposes only and is not investment advice.