Poonawalla Fincorp AUM up 68% in Q2FY26; GNPA drops

The latest quarter in focus

Poonawalla Fincorp reported a sharp expansion in its loan book in Q2FY26, alongside a sequential improvement in asset quality and a small uptick in margins. Assets under management (AUM) stood at Rs 47,701 crore, up 68.0% year-on-year and 15.6% quarter-on-quarter. Net interest income (including fees and other income) came in at Rs 905 crore, reflecting 40.3% YoY growth.

The Q2FY26 performance is notable because it follows a period where reported profitability was volatile, especially in Q4FY25 when higher expenses weighed on the bottom line. While quarterly profits are sensitive to costs and provisions in a fast-growing NBFC, the latest data points to steady execution on growth and underwriting.

Q2FY26 growth: AUM expands at a faster clip

The headline number for Q2FY26 was the AUM increase to Rs 47,701 crore. The growth rate suggests the company has maintained momentum through the year, even as it continues to adjust its portfolio mix. The company’s secured to unsecured on-book mix in Q2FY26 was 56:44, indicating a slight tilt towards secured assets.

Alongside growth, the company reported pre-provision operating profit (PPoP) of Rs 387 crore for the quarter, up 38% YoY. It also reported profit after tax (PAT) of Rs 74 crore in Q2FY26.

Loan book composition: where the AUM is coming from

Poonawalla Fincorp disclosed an AUM mix that shows meaningful diversification across borrower segments and products. MSME lending is the largest segment, accounting for 36% of AUM. Loan against property (LAP) and personal and consumer finance each account for 26%.

Pre-owned car finance made up 11% of the portfolio. Taken together, the split shows the company is not reliant on a single product line, while still keeping MSME at the centre of the franchise.

NII and NIM: margins hold up despite mix changes

Net interest income (including fees and other income) was reported at Rs 905 crore in Q2FY26, up 40.3% YoY. The company’s net interest margin (NIM) was 8.40% in Q2FY26 versus 8.32% in Q1FY26, indicating a modest sequential improvement.

This matters because management commentary across recent quarters has pointed to ongoing investments and a rising secured book. A higher secured share can support risk metrics, but may also moderate yields. The Q2FY26 NIM print suggests the company has, so far, protected pricing and product economics.

Operating profitability: PPoP rises even with investments

PPoP in Q2FY26 stood at Rs 387 crore, up 38% YoY. The company noted this came despite ongoing investment in new businesses and a skew towards the secured book.

For lenders, PPoP is a key indicator of underlying operating strength before provisions and taxes. With PPoP growing faster than headline profits in some periods, investors typically track whether cost build-up is temporary (linked to expansion) or structural.

Asset quality: sequential improvement in Q2FY26

The company reported stable asset quality in Q2FY26, with gross non-performing assets (GNPA) at 1.59% versus 1.84% in Q1FY26. Net non-performing assets (NNPA) also improved to 0.81% in Q2FY26 from 0.85% in Q1FY26.

This decline in delinquency ratios comes at a time when the company is scaling AUM at a high double-digit pace. For NBFCs, maintaining stable NPAs while growing is a key sign that underwriting and collections are keeping pace.

Key Q2FY26 operating metrics

Q4FY25 recap: profit hit by a sharp expense rise

In Q4FY25 (January-March 2025), Poonawalla Fincorp reported an 81% YoY decline in net profit to Rs 62.33 crore, largely due to a surge in expenses. Expenses in the quarter were reported at Rs 1,093 crore versus Rs 536.26 crore a year earlier, with finance cost and impairment on financial instruments cited as key drivers.

Yet, operational indicators remained in growth mode in Q4FY25. AUM stood at Rs 35,631 crore, up 43% YoY and 15% QoQ, while NII rose 12% YoY and 6% QoQ to Rs 715 crore. PPoP increased 19% YoY and 11% QoQ to Rs 333 crore, and credit costs were down 27% QoQ to Rs 253 crore.

Snapshot: Q4FY25 numbers referenced by the company/filings

Capital, liquidity, and portfolio strategy

For Q4FY25, the company reported a capital adequacy ratio (CAR) of 22.94% and a liquidity buffer of Rs 4,686 crore as of March 31, 2025. It also indicated an on-book secured mix of 57% in that quarter, up from 54% in the prior quarter.

Management also highlighted diversification efforts, including the launch of six new business lines, and noted a focus on building secured lending contribution. In the same results cycle, it said no dividend was declared, citing capital conservation for future growth.

FY26 expansion plans mentioned alongside results

In disclosures tied to Q4FY25, the company said it plans to open 400 new branches in FY26 and implement 25 AI solutions. It also positioned its approach as risk-first, supported by analytics for customer assessment.

These initiatives matter operationally because branch build-out can expand sourcing and collections reach, while analytics-led underwriting is typically aimed at improving customer selection and portfolio monitoring.

Market impact: what the numbers change for investors

The Q2FY26 update presents a cleaner operating picture than the Q4FY25 headline profit decline, with faster AUM growth, higher NII, and better NPA ratios compared with Q1FY26. The secured-to-unsecured mix (56:44) also signals continued alignment with the secured-lending push indicated earlier.

At the same time, the Q4FY25 experience shows that expenses, finance costs, and impairments can meaningfully swing reported profits even when AUM and NII are growing. For investors, the combination of growth and stable asset quality tends to shift attention to cost discipline and credit cost trajectory.

Analysis: why Q2FY26 stands out

Three signals from Q2FY26 are particularly important. First, AUM growth of 68% YoY to Rs 47,701 crore indicates strong scaling compared with the prior year. Second, NIM improved to 8.40% from 8.32% QoQ, suggesting pricing and product yields have not deteriorated materially despite portfolio mix changes.

Third, asset quality improved sequentially, with GNPA falling to 1.59% and NNPA to 0.81% versus Q1FY26 levels. With the company also reporting higher PPoP, it suggests that core operating momentum is intact, even as investment spend continues.

Conclusion

Poonawalla Fincorp’s Q2FY26 numbers show rapid AUM expansion, stronger NII growth, and a sequential improvement in asset quality, with a slight uptick in NIM. The broader context from Q4FY25 indicates that near-term profitability can be influenced by expenses and impairment trends even when growth remains strong.

Investors are likely to track how the company balances its secured-lending strategy, cost build-up linked to new businesses, and execution on FY26 plans such as 400 new branches and the rollout of 25 AI solutions.