Poonawalla Fincorp Targets ₹1.5 Trillion Asset Growth with New Retail Lending Lines
Poonawalla Fincorp Targets ₹1.5 Trillion Asset Growth with New Retail Lending Lines
Indian shadow bank targets asset growth to ₹1.5 trillion with new product lines.
Poonawalla Fincorp Ltd., a non-bank finance company controlled by billionaire Adar Poonawalla, is set to double its headcount as it expands into new lending segments and targets asset growth of ₹1.5 trillion ($17.7 billion) over the next five years. The company plans to introduce six retail-focused lending businesses within the next four to six quarters, according to Chief Executive Officer Arvind Kapil.
The new lending areas include loans for gold purchases, used cars, shopkeepers, and education, Kapil said. Since taking over in June, Kapil has strategized to expand the company’s physical presence, increasing the number of branches from around 100 to nearly 400 by next year. The company aims to tap into the demand for gold-backed loans in smaller cities through a mix of digital and physical channels, he added.
Despite the planned expansion, Poonawalla Fincorp faces challenges from slowing credit growth and increased regulatory scrutiny by the Reserve Bank of India, which has raised provisions to mitigate risks in the shadow banking sector. The company’s stock experienced a sharp decline in October after reporting higher provisions for bad loans and increased operating costs. However, the stock has since recovered, with analysts at Motilal Oswal Financial Services terming the changes a “kitchen sink” quarter under the new management team.
Kapil, formerly head of the mortgages business at HDFC Bank Ltd., has spent the past six months assembling a seasoned core management team, including professionals from Yes Bank Ltd. and his former employer. “The team’s experience in building and running large businesses will be crucial,” Kapil said, noting that the company’s workforce is expected to grow from 2,500 employees to 5,000 within three quarters as part of its new strategy.
While analysts have flagged potential short-term challenges such as margin compression and elevated operating costs, they have praised the direction of the changes. Motilal Oswal maintained a “buy” rating on the stock, acknowledging the steps as essential for strengthening the company’s franchise.
Additionally, Poonawalla Fincorp is evaluating the launch of a wealth management business. Initially, the firm plans to distribute third-party investment products through its network before potentially developing its own offerings, Kapil said.
Rebranded from Magma Fincorp Ltd. under the Poonawalla Group, the company’s growth initiatives come as it seeks to solidify its position in the competitive non-banking finance sector, with a strong emphasis on innovation and customer-focused lending solutions.
