The Ken did a story on Poonawalla Fincorp last week. It’s behind a paywall, but here are the four key summary points.
Poonawalla Fincorp, born out of a merger between Poonawalla Finance and Magma Fincorp, recently registered its best-ever quarter. And the credit goes to a makeover.
The company has taken Magma Fincorp apart brick by brick to rebuild it with a retail and digital product suite and a new set of urban, more credit-worthy customers.
Instead of investing its energy and monies in collections—as Magma Fincorp did—Poonawalla Fincorp has created a tight entry barrier for its customers. But in the process, it has been leaking old hands.
Throughout 2022 and early 2023, the company witnessed heavy attrition. So much so that there are only a handful of senior Magma employees left in the company. Mid-level Poonawalla employees are quitting too.
Multiple startups are co-loaned by Poonawala Fincorp, according to the market. I need assistance finding a list of startups that Poonawala co-lends to.
It is interesting to observe that if they materialize the guidance,
They have guided 30 to 35% growth of profit for at least 7 years.
(Armaan finance guided same for coming 3 years)
Next 3 years of no capital raise.
They are leveraged less than 2.
Operation costs are on steep decline as from 300+ branches to reduced till 89 due to tech Focus.
Valuation wise available at Price to book value of less than 4.
MSME has the Highest Yields compared overall with Other NBFCs (Armaan Financial is having yield of 36.1% & NNPA =0.4, with Poonawalas Cost of Capital at 8% NIM stands at 28% if success like Arman is replicated)
For point 6 No claim that Poonawala can make 36% yield, but NIM can be much high is the point I am trying to make.
What inferences can be drawn here?
