NATIONAL, 16 DECEMBER, 2024 (GPN): Pune-based NBFC, Poonawalla Fincorp, is preparing to double their workforce. They are broadening their product portfolio and looking to target a total asset base of INR 1.5 trillion ($17.7 billion) in the next five years. This company, owned by Adar Poonawalla, is going to introduce six new retail-focused lending segments in the next 4–6 quarters. As outlined by the CEO of the company, Arvind Kapil, these offerings will go hand-in-hand with the company’s existing services and improve their market presence.  

Expanding Branch Network for Better Reach  

In the upcoming product lines, loans for gold purchases, used cars, and education are included. The company is also looking to expand its physical presence significantly under the new CEO, Arvind Kapil, who took the helm in June 2024. They plan to grow their branch network from 100 to 400 in 2025. Using this strategy will help them cater to the increasing demand for gold-backed loans in smaller cities, utilizing both digital platforms and physical branches to improve accessibility.  

Challenges in a Changing Market Environment

This expansion is taking place amid a challenging environment marked by slowing credit growth. And, the RBI has increased regulatory scrutiny, introducing stricter provisions to reduce risks in the shadow banking sector. The company’s stock dropped in October due to higher bad loan provisions and increased operating expenses.  

Optimism Amid Challenges  

Even with these challenges, Poonawalla Fincorp’s CEO is optimistic, as he anticipates a drop in operating expenses by the end of the financial year. A more diverse range of lending options is also expected to mitigate risks.  

Targeting Diversified Customer Segments  

“To establish a robust franchise with a strong foundation, it’s crucial to offer nine to ten retail-focused products that cater to varied customer segments and lower overall risk,” Kapil stated. They plan to target the salaried employees working in India’s top 300 corporations as a part of their growth strategy.  

Building a Strong Leadership Team

Arvind Kapil, who has previously headed the mortgage department at HDFC Bank, has been working since his arrival to build his core management team. His team includes experienced professionals from Yes Bank, HDFC Bank, and other notable institutions, and their expertise in the field will come in handy to Poonawalla Fincorp’s ambitious expansion plans. Poonawalla Fincorp’s CEO also mentioned that they will be looking to double their workforce from 2500 to 5000 in the coming three quarters to ensure that they have the manpower to align with their growth ambitions.  

Stock Recovery and Analysts’ Support

Following the transition to new management, Poonawalla Fincorp’s stock has largely recovered from the earlier setbacks. Analysts at Motilal Oswal Financial Services Ltd. described the previous quarter as a “kitchen sink” phase for the company. However, they also acknowledged that the changes were necessary for building a stronger foundation. While they anticipate some margin compression and elevated costs in the short term, they maintained a buy rating, affirming the steps taken are in the right direction.  

Exploring Wealth Management Opportunities  

The company is also exploring opportunities in the wealth management space. Kapil indicated that the initial focus would be on distributing third-party investment products through its network, with plans to eventually develop its offerings.  

Rebranding and a Focus on Organic Growth  

Rebranded from Magma Fincorp Ltd. after its acquisition by Poonawalla in 2021, the firm remains open to acquisitions to further its growth. However, Kapil emphasized that the immediate focus will be on organic expansion in the short to medium term.  

The Poonawalla Legacy of Trust

The Poonawalla group, well-recognized for its contributions during the pandemic, has become a household name in India. The Serum Institute of India, part of the group, is the largest vaccine manufacturer globally and played a key role in producing the AstraZeneca vaccine. They also supported the Covax initiative led by the World Health Organization for equitable vaccine distribution.  

“The Poonawalla name is synonymous with trust, particularly for saving lives in nearly every Indian household,” Kapil remarked. “As a financial services provider, we have an excellent opportunity to leverage that trust and extend it to retail lending, creating a granular, customer-focused business.”