Securing Financial Stability with NCD Issuance

Poonawalla Fincorp, a leading name in the non-banking financial sector, has recently made a significant decision to raise funds by issuing non-convertible debentures (NCDs). The company intends to raise Rs 100 crore, with an additional green shoe option of Rs 90 crore, potentially bringing the total to Rs 190 crore. This move signals the company’s focus on fortifying its financial foundation and positioning itself for future growth.

Overview of Poonawalla Fincorp’s Business Model

Poonawalla Fincorp is part of the renowned Cyrus Poonawalla Group and operates as a non-deposit taking, systemically important non-banking financial company (ND-SI-NBFC). Registered with the RBI, the company offers a wide range of services, including personal loans, business loans, and specialized financing solutions. Over time, the company has established itself as a trusted player in India’s competitive financial services sector.

NCD Issuance: Key Highlights

Poonawalla Fincorp’s issuance of NCDs is a strategic step to raise capital for business expansion. The company plans to raise Rs 100 crore, with an additional green shoe option of Rs 90 crore, totaling Rs 190 crore. These NCDs, which offer a fixed return to investors, will be listed on the Bombay Stock Exchange (BSE), providing liquidity and transparency.

The debentures will be offered at a face value of Rs 1 lakh each, with a 2% coupon rate over the applicable base rate. This ensures that investors receive attractive returns while Poonawalla Fincorp can strengthen its balance sheet.

Poonawalla Fincorp’s Comprehensive Financial Offerings

Poonawalla Fincorp offers a wide range of financial products designed to cater to the needs of various customer segments. These include:

1. Pre-Owned Car Loans: Financing options for purchasing used cars.

2. Personal Loans: Loans for personal needs like education or medical expenses.

3. Loans to Professionals: Special loans for professionals to invest in their practices.

4. Business Loans: Financing for SMEs to grow their businesses.

5. Loan Against Property: Loans secured against real estate for larger financing requirements.

6. Consumer Loans: Loans for purchasing consumer goods or home improvements.

7. Specialized Financing: Loans for niche sectors such as medical and machinery equipment.

Financial Performance: A Mixed Outlook

Poonawalla Fincorp’s financial performance has been a mix of growth and challenges. As of September 2024, the company reported Rs 28,396 crore in assets under management (AUM). However, in Q2 FY25, it posted a significant loss of Rs 471.04 crore, compared to a net profit of Rs 860.17 crore in Q2 FY24. Total income also declined by 36.4%, indicating pressure on its operations.

Strategic Focus for Future Growth

Despite these challenges, Poonawalla Fincorp’s strategic focus remains on long-term growth. The funds raised from the NCD issuance will support the company’s expansion and innovation in its financial products. With a diversified portfolio and a strong market presence, the company is well-positioned to navigate the current financial turbulence and continue to grow in the future.