Poonawalla Fincorp Limited

Financial Services — Credit Services · NSE

₹447.50+₹6.20 (+1.40%)

DalalBaazaar Score

59 / 100

🟡 Moderate

Verdict

CAUTION

Risk

Low

Driven by negative free cash flow.

In simple words: The business is earning a fairly low return on the money invested in it, with both sales and profits growing well. Cash generation is currently the main factor to watch.

Decision support, not a buy or sell call.

As of 18 Oct 2026, 6:10 pm

Caution warranted. Multiple fundamental metrics — flagged in red below — point to either valuation stretch, leverage risk, or weakening profitability. This doesn't mean avoid the stock outright, but it does mean the burden of proof is on the growth story to justify the current price.

Understanding the Business

Company site ↗

The 60-second version of Poonawalla Fincorp Limited — what it does, how it earns, and who it competes with, before any of the numbers below.

What does this company do?

Poonawalla Fincorp Limited, a non-banking finance company, provides consumer and MSME financing services in India.

IndustryCredit Services

SectorFinancial Services

Employees5,860

Annual revenue₹6,491 Cr

How does it make money?

Turns over ₹6,491 Cr a year. Of every ₹100 of sales, about ₹8 reaches shareholders as profit, with ₹28 left at the operating level before interest, tax and depreciation. Each of its 5,860 employees supports ₹1.11 Cr of revenue a year, the signature of a capital- or asset-led business.

EBITDA margin28.3%

Net margin8.3%

Revenue / employee₹1.11 Cr

Who are its competitors?

The closest listed comparisons in its industry are BAJAJ FINANCE LIMITED, STATE BANK OF INDIA, HDFC BANK LTD, ICICI BANK LTD.. These are the companies its valuation and returns are measured against elsewhere in this report.

BAJAJ FINANCE LIMITEDP/E 30.2x · ROE 17.8%

STATE BANK OF INDIAP/E 10.3x · ROE 15.2%

HDFC BANK LTDP/E 15.9x · ROE 13.8%

ICICI BANK LTD.P/E 18.1x · ROE 16.5%

What is its competitive advantage?Not assessable from these ratios

For a lender, returns on capital are shaped by leverage and funding cost rather than by pricing power, so the usual financial signature of an advantage does not apply. Judge this one on deposit franchise, cost of funds and asset quality — none of which are in this data.

ROCE1.8%

ROE9.2%

Peer median ROE16.5%

What is the outlook?

9 analysts covering the stock expect revenue to grow about 37.8% and earnings to grow about 57.6% in the year to 2028. These are estimates by people who follow the company, not a forecast for the wider industry.

Est. revenue growth+37.8%

Est. earnings growth+57.6%

Analysts9

What has been driving growth?

Growth has come mainly from selling more, rather than from keeping more of each sale. Over 3 years revenue moved +247% while net margin moved -77% relative to itself. What this cannot tell you is which products, customers or geographies did the work — that lives in the segment disclosures of the annual report.

Revenue effect+247%

Margin effect-77%

DalalBaazaar Score

59/ 100

Moderate

Weighted across six categories. Every point is explained below.

• P/E of 35.0x already prices in growth
✗ P/E is 58% above its own historical median of 22.2x — expensive by its own standards

Quality vs. Valuation

Company Quality

63/ 100

Average

How good the business is, ignoring the share price entirely.

Valuation

32/ 100

Expensive

What you are being asked to pay, ignoring how good the business is.

A reasonable business at a reasonable price — neither the quality nor the valuation stands out in either direction.

Historical Valuation

Current P/E

35.0x

3Y Median

22.2x

40 monthly readings · mean 32.3x · range 13.0x–68.0x

Sector Median

17.0x

median of 4 sector peers

⚠️Current valuation is approximately 58% above its 3y median of 22.2x. Paying more than usual needs a reason — faster growth, a better balance sheet, or a re-rating you believe in.

⚠️Against its sector it trades 106% above the peer median of 17.0x.

vs. its own history

Expensive

22.2x median over 40 months · +58%

vs. sector peers

Expensive

17.0x median of 4 peers · +106%

vs. generic bands

Fair

15x–35x

P/E (Trailing)

35.0x

P/B

2.86x

EV/EBITDA

47.6x

PEG

—

Dividend Yield

None

What's Good / What's Bad

🟢 What's Going Well0

Nothing stands out as clearly improving on the years of data available.

🔴 What Needs Attention4

Margins are compressing
EBITDA margin has slipped from 37.5% to 28.3% over 3 years.
Return on equity is falling
ROE has dropped from 10.0% to 5.2% — each rupee of shareholder capital earns less than it did.
Return on capital is falling
ROCE has declined from 5.0% to 1.8% — often a sign of competition or overexpansion.
Valuation above its historical average
At 35.0x the stock trades 58% above its own median of 22.2x.

Red Flags

2 items require attention · 1 high · 1 watch

🔴Significant margin compressionFinancial
EBITDA margin has fallen 9.1 points, from 37.5% to 28.3%.
🟡Profit is decliningFinancial
Net profit is down 21% over 3 years.

Investment Thesis

🟢 Bull CaseWhat could make this work?

No clear supporting case emerges from the available numbers.

🔴 Bear CaseWhat could go wrong?

Margins are being competed away
EBITDA margin has fallen from 37.5% to 28.3%. If the trend continues, profit falls even on flat sales — and margin decline rarely reverses quickly.
The price already assumes success
The stock trades 58% above its own median multiple. At this level the business has to deliver just to stand still, and a stumble is repriced twice — lower earnings on a lower multiple.
Returns on shareholder capital are falling
ROE has dropped from 10.0% to 5.2%. Each rupee of equity earns less than it did, so profit growth increasingly depends on raising more capital rather than on the existing base working harder.
Earnings are hard to forecast
Profit has swung sharply from year to year, so any single year — good or bad — is a weak guide to the next. Cyclical earnings deserve lower multiples for that reason.

🟡 Key Things to WatchMeasurable tripwires, set against where this company stands today

1Revenue growth stays above 39% a year✓ 51.4% CAGR
Latest reported year was 92.1%. The bar is set below the established compounding rate, so ordinary variation does not trip it.
2EBITDA margin holds above 26%✓ 28.3%
Two points below today's level — enough room for noise, tight enough to catch real compression.
3Return on equity stays above 8%✓ 9.2%
For a lender this is the cleanest single read on whether the book is being grown profitably.
4Valuation vs its own median of 22.2x✗ 35.0x today
A re-rating above its own history needs a reason; without one it is just a higher price.

Investment Checklist

7 / 12 checks passed

✗ Strong return on equity (ROE ≥ 15%)
✗ Strong return on capital employed (ROCE ≥ 15%)
✓ Healthy net margin (≥ 10%)
✗ Generates positive free cash flow
✗ Manageable leverage (Debt/Equity < 1.0)
✓ Adequate short-term liquidity (Current Ratio ≥ 1.0)
✓ Revenue growing year-over-year
✓ Profit growing year-over-year
✓ Not trading at an extreme valuation (P/E < 40x)
✓ Not buying right at the 52-week high
✓ Analyst consensus isn't majority-sell
✗ Short-term technical trend isn't bearish

Price history

Quick Metrics

3 good · 5 neutral · 3 weak

Market Cap

₹39,407 Cr

Mid Cap

Mid-sized — more growth headroom, but sharper swings than large caps

P/E (Trailing)

35.0x

Fair

Fairly valued against the generic band

P/B Ratio

2.86x

Fair

Moderate premium to the company's book value

EPS (TTM)

₹12.79

Profitable

Profitable on a per-share basis

ROE

9.2%

Moderate

Moderate capital efficiency

ROCE

1.8%

Weak

Low return on total capital employed

Debt/Equity

4.31x

High

High leverage

Revenue Growth (YoY)

92.1%

Healthy

Healthy top-line growth

Profit Growth (YoY)

348.4%

Healthy

Profits growing at a healthy clip

Dividend Yield

None

No dividend yield reported — usually means no payout, but verify if one was recently initiated

Free Cash Flow

-₹21,893 Cr

Cash burning

Spending more cash than the operations bring in

More Metrics

CMP

₹447.5

P/E (Forward)

16.2x

Improving

Below the trailing multiple — the street expects earnings to grow into the price

ROA

1.8%

Weak

Assets generate little profit

Operating Margin

40.3%

Good

Healthy core-business profitability

Net Margin

26.7%

Good

Strong bottom-line conversion

Current Ratio

48.52

Comfortable

Healthy short-term liquidity

Beta (vs Nifty)

0.30

Defensive

Steadier than the market

52W Range Position

51%

Mid-range

Technical Snapshot

SMA 20 / SMA 50

452.9 / 464.2

Bearish alignment (short < long)

Price vs SMA 200

Above

Long-term uptrend

RSI (14)

44.5

Neutral momentum

Financial Trend (4-Year)

Metric	FY23	FY24	FY25	FY26	3Y CAGR
Revenue	₹1,872 Cr	₹2,951 Cr	₹4,000 Cr	₹6,491 Cr	+51.4%
EBITDA	₹701 Cr	₹1,365 Cr	₹1,400 Cr	₹1,840 Cr	+37.9%
EBITDA Margin	37.5%	46.3%	35.0%	28.3%	—
PAT (Net Profit)	₹684 Cr	₹1,683 Cr	-₹98 Cr	₹542 Cr	-7.5%
EPS	₹8.86	₹21.63	₹-1.27	₹6.82	-8.4%
ROE	10.0%	20.6%	-1.2%	5.2%	—
ROCE	5.0%	14.0%	-0.6%	1.8%	—
Total Debt	₹11,209 Cr	₹15,216 Cr	₹26,081 Cr	₹48,436 Cr	+62.9%
Free Cash Flow	-₹5,145 Cr	-₹7,574 Cr	-₹10,613 Cr	-₹21,893 Cr	—

🟢 Revenue has grown at 51.4% a year over 3 years.

🟢 EBITDA has grown at 37.9% a year over 3 years.

🔴 EBITDA Margin has fallen from 37.5% to 28.3% over 3 years (-9.1 pts).

🔴 PAT (Net Profit) has shrunk at 7.5% a year over 3 years.

🔴 EPS has shrunk at 8.4% a year over 3 years.

🔴 ROE has fallen from 10.0% to 5.2% over 3 years (-4.7 pts).

🔴 ROCE has fallen from 5.0% to 1.8% over 3 years (-3.2 pts).

🔴 Total Debt has grown at 62.9% a year over 3 years.

Balance Sheet & Cash Flow — FY2026

Total Assets

₹60,272 Cr

Total Liabilities

₹49,923 Cr

Total Debt

₹48,436 Cr

Cash & Equivalents

₹286 Cr

Operating Cash Flow

-₹21,786 Cr

Capex

-₹107 Cr

Shareholding (proxy)

Institutional Holding

19.6%

Insider Holding

60.4%

Corporate Actions

Next Earnings

09 Oct 2026

Ex-Dividend Date

31 Jan 2024

Analyst Consensus

Recommendations

6 Buy · 1 Hold · 2 Sell

Target Price (Mean)

₹529.56

+18.3% vs CMP

Target Range

₹395 – ₹663

Peer Comparison

Company	P/E	ROE
BAJAJ FINANCE LIMITED	30.2x	17.8%
STATE BANK OF INDIA	10.3x	15.2%
HDFC BANK LTD	15.9x	13.8%
ICICI BANK LTD.	18.1x	16.5%

Recent News

1 positive4 mixed1 general

Why Poonawalla Fincorp Share Price is Rising

Equitymaster, 12 Oct

186% rise in 5 years! Poonawalla Fincorp share price jumps 7% on strong Q2 results 2026 | Should you buy, sell or hold?

TradingView, 12 OctPrice move

🟡Mixed / dependsA price move, which is not by itself a change in the business. Worth finding the cause before reading it as either good or bad.

Poonawalla Fincorp shares jump 8% on healthy Q2 PAT growth, asset quality improvement; what investors should know

Upstox, 12 OctPrice move

🟡Mixed / dependsA price move, which is not by itself a change in the business. Worth finding the cause before reading it as either good or bad.

Poonawalla Fincorp shares soar 8% after Q2 net profit spikes 407% YoY to Rs 375 crore

The Economic Times, 12 OctPrice move

🟡Mixed / dependsA price move, which is not by itself a change in the business. Worth finding the cause before reading it as either good or bad.

Poonawalla Fincorp shares surge 8% as Q2 profit jumps nearly 5-fold

Business Standard, 12 OctResults

🟢Potentially positiveReported improvement. Check whether it came from volume, price or a one-off item before treating it as a trend.

Poonawalla Fincorp Shares Surge Over 8% As Q2 Profit Increases Five-Fold, Results Beat Expectations

NDTV Profit, 12 OctPrice move

🟡Mixed / dependsA price move, which is not by itself a change in the business. Worth finding the cause before reading it as either good or bad.

Watch Items

This is a financial-sector business: borrowing is its raw material, not leverage in the usual sense. Debt/Equity and ROCE here aren't comparable to a manufacturer's — read them alongside NIM, GNPA and capital adequacy from the company's own disclosures.
Cross-check against the company's latest quarterly filing / investor presentation before acting.

DalalBaazaar Thesis

🟢Business QualityStrong13.9/20

🟢Financial HealthStrong17/20

🟡GrowthModest9.3/20

🟡ProfitabilityModerate7.5/15

🔴ValuationDemanding6.1/15

🟡RiskModerate5/10

Unremarkable in both directions

A reasonable business at a reasonable price. Nothing here is alarming and nothing is compelling, which usually means the decision rests on things this data cannot see — the industry's direction, management's intent, and what else is available to you. 1 high-severity red flag sits above this conclusion and should be read first.

This thesis breaks if

✓Revenue growth stays above 39% a year51.4% CAGR
✓EBITDA margin holds above 26%28.3%
✓Return on equity stays above 8%9.2%
✗Valuation vs its own median of 22.2x35.0x today