Poonawalla Fincorp formerly Magma Fincorp

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.

Link to the full story: Poonawalla Fincorp is not interested in Magma customers. Magma employees are not interested in Poonawalla Fincorp - The Ken

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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.

Here’s the list of startup

This is not fill list. Tou can add: Jai Kisan, U gro, Fast Loans, Finance Peer, and so on

It is interesting to observe that if they materialize the guidance,

  1. They have guided 30 to 35% growth of profit for at least 7 years.
    (Armaan finance guided same for coming 3 years)
  2. Next 3 years of no capital raise.
  3. They are leveraged less than 2.
  4. Operation costs are on steep decline as from 300+ branches to reduced till 89 due to tech Focus.
  5. Valuation wise available at Price to book value of less than 4.
  6. 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)
  7. 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?

Above information picked up from:

  1. Interview with Adar Poonawala
    https://youtu.be/6JmYuisj4tU?si=iAjsdRFx7VBpgibw

  2. Poonawala Fincorp Investor Ppt:
    I can put only 2 links in post hope you can find it from BSE

3.Armaan financial Investor Ppt:

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I was going through the Emkay research report and found that disbursement of short tenure loans has gone up, contrary to what they are guiding for

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Poonawalla Fincorp seems to be walking the talk.

ed8fa851-5855-4d18-9647-b691cc168161.pdf (995.3 KB)

Why is this falling? Any major event or PE adjustment before Bajaj IPO?

332 Crs worth of shares sold by the MD

Nothing wrong came out regarding the company. So I don t think there is much to worry here. A person can express his desire to move out of operations and that s what the erstwhile MD did. It should recover unless he got more shares to get rid of. He might require funds for his next venture which he thinks would be more profitable than sticking to poonawalla. From investors perspective what matters is to see if there are better and equally reliable alternatives. If not, better to stick, else take a calculated risk and move. The fall has been more than anyone anticipated perhaps, but all is not lost either. I didn t see any red flag yet.

Promoting Abhay Bhutada to group level is not a promotion but a way to shunt him out. And that’s clear from the way he sold a big quantity. He of course said in the latest concall that he was never interested in managing day to day operations since he is a serial entrepreneur. He would focus in his next start up, whatever that be.

As far as I remember, in the interview Mr Abhay said that he himself wanted to be promoted and the poonawalla group was not with him on this and he had to convince them for the same

True I have also heard that in concall also, but being in this industry so far I understood that this is a technique used by most of the people from corporates to save their image.Companies also use it to save thier reputation!

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