The Board of Directors of Poonawalla Fincorp Limited (PFL), today announced its unaudited results for the quarter ended June 30, 2021 (Q1FY22).
On a consolidated basis, the Company's profit before tax (PBT) for Q1FY22 was Rs 81 crore and Assets under Management (AUM) stood at Rs 14,424 crore.
Performance Highlights
(Consolidated) AUM remained flat at Rs 14,424 crore on QoQ basis due to COVID-19 restrictions across the country. Q1FY22 NIM increased by 107 bps to 7.92 percent in Q1FY22 from 6.85 percent in Q1FY21. Consolidated PBT increased by 72 percent to Rs 81 crore in Q1FY22 from Rs 47 crore in Q1FY21.
RoA increased to 1.80 percent in Q1FY22 from 0.90 percent in Q1FY21
Capital Adequacy Ratio (CAR) increased to 57.8 percent in June '21 from 20.3 percent in March '21.
Collections
At a consolidated level, the collections which dipped to 84 percent in April' 21 and fallen further to 80 percent in May '21 owing to COVID-19 restrictions across the country, recovered to 93 percent in June '21 and have further improved to 98 percent in July '21.
Asset Quality
Gross Stage 3 and Net Stage 3 have reduced from 5.8 percent and 3.7 percent as at Q1FY21 to 5.4 percent and 2.7 percent as at Q1FY22 respectively on a consolidated basis. The Company has one of the best provision coverage ratios across all three stages. Standard asset coverage ratio stands at 4.5 percent vs 2.5 percent in June '20; Stage 3 asset coverage ratio stands at 51.0 percent vs 36.3 percent in June '20.
The Company has continued the process of risk assessment on its credit exposures as of 30th June 2021, and accordingly, in addition to the model determined Expected Credit Loss (ECL) provision, it carries a management overlay of Rs 283 crore (2.0 percent of AUM) against any future potential impact of COVID-19, which in management assessment is adequate to cover the impact of COVID-19 wave 3 on the consolidated loan portfolio.
Liquidity and Cost of Borrowings
The Company continues to maintain a strong liquidity position with around Rs 3,238 crore of surplus liquidity, apart from undrawn sanctions in hand of Rs 625 crore.
Repricing of existing borrowings is underway and is expected to bring significant cost savings over the next few quarters. Currently the company is doing its incremental borrowings at sub 7 percent.
Capital Infusion and Rebranding
After the capital infusion of Rs 3,456 crore in May '21, rebranding of Magma to Poonawalla has been completed. W.e.f. July 22, 2021, Magma Fincorp Limited has been renamed to Poonawalla Fincorp Limited and the Company's subsidiary, Magma Housing Finance Limited has been renamed to Poonawalla Housing Finance Limited. Consequently, PFL has become a subsidiary of Rising Sun Holdings Private Limited (RSHPL) and PHFL a step-down subsidiary of RSHPL.
With the infusion of capital, the Company's Capital Adequacy ratio increased to 57.8 percent in June '21 from 20.3 percent in Mar'21 and leverage fell to 1.3x in June '21 from 4.8x in March '21.
Strengthening of leadership team
The company has undertaken strengthening of its leadership team as a part of the transformation exercise. It has roped in various industry leaders through a string of top executive hiring across the functions.
Technology and Digital Initiatives
The company has undertaken a complete transformation of the technology infrastructure with implementation of state-of-the-art Unified Loan Origination System (LOS), Loan Management System (LMS) and Customer Relationship Management (CRM) platforms. The company is moving its technology to a cloud-based infrastructure to ensure scalability.
Revised Product Focus
Pursuant to the capital infusion and rebranding of the Company, Personal loans and Loans to Professionals have been added to the Company's product suite. The company will continue to build its franchise of pre-owned cars, business loans and affordable housing.
The Company plans to launch new products like medical equipment and SME LAP by end of Q2FY22. In Q3 company plans to launch small ticket LAP, Merchant cash advance, co-branded credit card and machinery loan while in Q4FY22 company plans to launch consumer durable, EMI Card, supply chain finance and co-lending. In line with the focus on consumer and small business segment, new products are being calibrated for market dynamics and will be launched at opportune time.
Commenting on Poonawalla Fincorp's performance, CA Abhay Bhutada, Managing Director, Poonawalla Fincorp Limited said "We are on our way to build a strong franchise based on conservative and calibrated approach to risk management and asset quality. As the collection efficiencies show signs of improvement, we are looking at the markets with cautious optimism and are well prepared and positioned to tap into the same."
