Detailed Rationale

Crisil Ratings has assigned its ‘Crisil AAA/Stable’ rating to Rs 10000 crore of Non-Convertible Debentures of Poonawalla Fincorp Limited (PFL) and reaffirmed its ‘Crisil AAA/Crisil AA+/Stable/Crisil A1+’ ratings on the existing bank facilities and debt instruments of PFL.

 

Crisil Ratings has also withdrawn rating on perpetual debt of Rs 7 crore on redemption and at company’s request. Crisil Ratings has received requisite documentation for withdrawal. The withdrawal is in line with Crisil Ratings’ policy for withdrawal of ratings.

 

The ratings continue to be driven by the strategic importance and expectation of support from, Rising Sun Holdings Private Limited (RSHPL; which holds 63.96% stake in PFL, as on September 30, 2025), an investment holding company of the Cyrus Poonawalla promoter group owned and controlled by Mr Adar Poonawalla. The promoter’s flagship company is Serum Institute of India Private Limited (SIIPL; rated 'Crisil AAA/Stable/Crisil A1+'). SIIPL infused about Rs 6,782 crore in the form of compulsorily convertible cumulative preference shares (CCPS) in RSHPL till March 31, 2025. This capital was used to infuse funds in various businesses of the group including PFL. The foray into financial services business through PFL is in line with the group's focus on domestic consumption as a key theme in their growth philosophy. PFL will play a key role through which this strategy will be implemented in the areas of interest of the group i.e., consumer and MSME (micro, small and medium enterprises) financing through ‘phygital’ model, combination of ground level presence and AI focused tech led model. The rating also factors in the expectation of continued support demonstrated by articulation of RSHPL’s intention to (i) maintain majority shareholding in PFL and retain management control, (ii) provide equity capital to support growth and manage risk, if and when required and (iii) maintain strategic linkages and management oversight so that, among others, PFL conducts its business in a manner such that it honors its stakeholder obligations in a timely manner.

 

Crisil Ratings believes that PFL will remain of high strategic importance to RSHPL, given the majority shareholding in PFL. Crisil Ratings also notes that there is a strong management oversight for the company to conduct its business, with Mr. Adar Poonawalla being the non-executive chairman of the board, thereby ensuring active involvement in the group-level strategies. Additionally, PFL’s shared brand name with the promoter further enhances the expectation of support to the financial services entity if required.

 

The ratings also factor in the company’s healthy capitalization, diversified product offerings and resource profile with competitive cost of borrowings and experienced senior management. The strengths are partially offset by the lack of seasoning of the recent portfolio and demonstration of sustainability of the earnings profile.

 

The rating on the perpetual bonds continues to reflect the extent of buffer over the regulatory capital adequacy requirements, and high financial flexibility due to the ownership of RSHPL, an investment holding company of the Cyrus Poonawalla promoter group, owned and controlled by Mr. Adar Poonawalla. Crisil Ratings believes that it will continue to maintain adequate capitalisation.

Key Rating Drivers - Strengths 

Expectation of need-based timely financial support from RSHPL

RSHPL is a key investment holding company with 99.99% equity stake held by Mr. Adar Poonawalla, CEO of SIIPL and Chairman and Managing Director of Serum Life Sciences Pvt Ltd (SLS). SIIPL invested Rs 6,782 crore in RSHPL through CCCPS till September 30, 2024. SIIPL itself is entirely held by Dr. Cyrus S Poonawalla and family members both individually and through trusts whereas SLS is held by RSHPL (33%) and SIIPL (67%). As on September 30, 2025, RSHPL holds 63.96% stake in PFL.

 

SIIPL is among the largest vaccine manufacturers globally by number of doses produced. Its vaccine portfolio includes vaccines for DTP, MMR, Polio, Hib, r-Hepatitis B, Rabies and Rotavirus. It also manufactures Covishield vaccine against Covid-19 in India. Crisil Ratings notes that over the past 4-5 years, SIIPL has been funding investments in subsidiaries and other companies of the Poonawalla group. SIIPL’s investments are well diversified across sectors including financial services, green energy, real estate, aviation, pharmaceutical packaging, etc.

 

The ratings continues to factor in the expectation of support demonstrated by articulation of RSHPL’s intention to (i) maintain majority shareholding in PFL and retain management control, (ii) maintain strategic linkages and management oversight so that, among others, PFL conducts its business in a manner such that it honors its stakeholder obligations in a timely manner and (iii) provide equity capital to support growth and manage risk, if and when required.

 

Crisil Ratings believes that PFL will remain of high strategic importance to RSHPL, an investment holding company, owned and controlled by Mr. Adar Poonawalla, given the majority shareholding in PFL. Crisil Ratings also notes that there is a strong management oversight for the company to conduct its business, with Mr. Adar Poonawalla being the chairman of the board, thereby ensuring active involvement in the group-level strategies. Additionally, PFL’s shared brand name with the promoter further enhances the expectation of support to the financial services entity if required.

 

Healthy capitalisation

Company’s networth stood healthy at Rs 9,822 crore as on September 30, 2025 and has improved from Rs 8,124 crore as on March 31, 2025, as it has received equity of around Rs. 1,500 crore from RSHPL through preferential issue in September 2025. The gearing stood at 3.6 times as on September 30, 2025. Overall capital adequacy ratio also stood healthy at 20.85% as on September 30, 2025. The capitalization metrics is expected to continue to remain healthy driven by accruals and gearing metrics are not expected to go beyond 5 times on a steady state basis.

 

Diversified resource profile and competitive funding costs

The company benefits from having access to diversified funding mix covering capital markets and bank loans at competitive funding costs. The company has been diversifying their bank and institutional funding by introducing private sector banks, foreign banks and more PSBs/ financial institutions and is raising NCD (non-convertible debentures) from a diversified set of investors. The Company has also raised money through ECB (External Commercial Borrowings) route. As on September 30, 2025, the company had total borrowing of Rs 35,717 crore which was comprised of term loan (44%) followed by NCDs (26%), commercial paper (10%), CC/WCDL line (10%), ECB (8%) and remaining by sub debt, perpetual debt and others. During first half of fiscal 2026, PFL has raised ~Rs 29,871 crore (gross) of funds from diversified sources. The weighted average cost of borrowings stood at 7.69% as on September 30, 2025.

 

Experienced senior management

The company is governed by experienced board of directors, with Mr. Adar Poonawalla being the Chairman of the board. The board is supported by a strong senior management with relevant and significant experience in retail financing, having previously worked at reputed banks and NBFCs (non-bank financial companies). The senior management team is led by Mr. Arvind Kapil as the Managing Director & CEO. The company has also further strengthened its leadership across functions by onboarding highly experienced key personnel. These senior management personnel have been in the industry for more than two decades each and have extensive experience in their functional areas.             

Key Rating Drivers - Weaknesses 

Comfortable asset quality metrics; new loan book, however, lacks seasoning

PFL reported comfortable overall gross non-performing assets (GNPA) of 1.59% as on September 30, 2025 as against 1.84% as on March 31, 2025. NNPA also stood comfortable at 0.81% as on September 30, 2025 as against 0.85% as on March 31, 2025. PFL’s assets under management (AUM) grew by ~43% year-on-year in fiscal 2025 and thereafter by ~68% (annualized) in first half of fiscal 2026 to Rs 47,701 as on September 30, 2025.

 

The company’s portfolio consisting primarily of retail and MSME product segments, had secured and unsecured mix of 56:44 (On-book portfolio) as on September 30, 2025. Over the near-to-medium term, the company plans on increasing focus on newer segments launched recently - gold loans, consumer durable loans, prime personal loans, shopkeeper loans, education loans and used commercial vehicle financing. Given limited portfolio seasoning, performance of asset quality across asset classes including newer segments will remain a key monitorable.

 

Sustainability of earnings profile to be monitored

The company reported net profit of Rs 137 crore in first half of fiscal 2026 as compared to net loss of Rs 98 crore in fiscal 2025 (loss was primarily because of one-time provisioning of Rs 666 crore for erstwhile short term personal loan book and Rs 71 crore for operating expenses). Consequently, return on average managed assets (RoMA) improved to 0.6% in first half of fiscal 2026 as against negative 0.3% in fiscal 2025. The pre-provisioning profit stood at Rs 711 crore in first half of fiscal 2026 as against Rs 1,417 crore in fiscal 2025.

 

Net interest income as a % of average managed assets reduced to 6.5% (annualized) in first half of fiscal 2026 as against 7.5% in fiscal 2025. On the other hand, the operating expenses as % of average managed assets have inched up marginally to 4.4% (annualized) in first half of fiscal 2026 as against 4.1% in fiscal 2025 primarily on account of the launch of new businesses.

 

To strengthen the company’s presence across the country with a diversified product of secured and unsecured products, PFL plans to open 400 new branches in a phased approach till March 2026 for the recently launched gold loan business. Of this, they have already launched 160 branches across Gujarat, Haryana, Rajasthan and Maharashtra as of September 2025. Thus, with the launch of newer products and overall strengthening of risk management systems amidst growing loan book, investments towards AI focused technology platforms and others, operating expenses are expected to increase in the near to medium term. This is expected to have a bearing on the company’s profitability in near term. Thus, the ability of the company to manage its operating expenses and credit costs and thereby improve its earnings profile will remain a key monitorable.

Liquidity Superior

As on September 30, 2025, the company had unencumbered cash, cash equivalent and liquid investments of around Rs 1,787 crore. Besides, it has unutilized working capital demand lines of ~Rs 4,474 crore. This comfortably covers debt obligations for over next 2 months. Furthermore, as on September 30, 2025, the ALM (asset liability maturity) profile of the company remained strong with positive cumulative gaps across all the buckets.

Outlook Stable

The rating factors in the expectation of need-based timely support from RSHPL, an investment holding company of the Cyrus Poonawalla promoter group, whose flagship company is SIIPL.

 

In addition, the rating on perpetual debt instruments remains sensitive to the capital buffer maintained by PFL, over regulatory capital requirements, and rating transition on these instruments could potentially be sharper than those on other debt instruments and bank facilities.

Rating sensitivity factors

Downward Factors:

• Decline in support from, or strategic importance to, RSHPL, an investment holding company of the Cyrus Poonawalla group, whose flagship company is SIIPL) or material change in shareholding in PFL, or in Crisil Ratings’ view any downward revision in the credit profile of RSHPL.
• Any sustained deterioration in asset quality and earnings profile of the company.
• Significant jump in gearing beyond 5 times on a sustained basis while scaling up the portfolio.

About the Poonawalla Fincorp Limited

Incorporated as Magma Leasing Ltd, the company commenced its operations in 1989. The company was renamed to Magma Fincorp Limited in 2008 and PFL in 2021 post the acquisition by Rising Sun Holdings Private Limited (an entity owned and controlled by Mr. Adar Poonawalla).  The company’s financial services offerings include preowned car finance, personal loans, loans for professionals, business loans, loans against property, machinery loans, education loans, commercial vehicle loans, shopkeeper loans, gold loans, and Consumer durable loans.

Key Financial Indicators

Particulars as on,	Unit	Sept- 25	Mar- 25	Mar-24	Mar-23
Total Assets	Rs Crore	46,909	34,894	24,036	18,022
Total income	Rs Crore	2,857	4223	3,152	2,010
Profit after tax	Rs Crore	137	(98)	2,056	585
GNPA	%	1.59	1.84	1.16	1.44
NNPA	%	0.81	0.85	0.59	0.78
Gearing	Times	3.6	3.2	1.9	1.7
Return on average managed assets#	%	0.6^	(0.3)	4.6*	3.5

#Profit after tax divided by average assets (including managed book)

*excluding one-offs

^annualized

Any other information: Not applicable