Poonawalla Fincorp Ltd. Shares in Focus as UBS Initiates Coverage with Buy Rating, ₹640 Target
Shares of Poonawalla Fincorp Ltd. will remain in focus on Thursday, February 26, after UBS initiated coverage on the non-banking financial company with a positive outlook and a significant upside target.UBS Assigns Buy Rating, Sees 38.9% Upside
UBS has initiated coverage on Poonawalla Fincorp with a buy rating and a price target of ₹640 per share. The target suggests a potential upside of 38.9% from the previous closing price of ₹460.5 per share.The brokerage highlighted the company’s strong management and promoter backing, along with its AAA credit rating, as key positives supporting its investment case.
Focus on Loans Against Property and Gold Loans
According to UBS, loans against property and gold loans are expected to be the primary growth drivers for Poonawalla Fincorp going forward. The brokerage believes these segments will play a crucial role in expanding the company’s lending portfolio and strengthening its margins.UBS noted that the company’s return on assets is likely to reach 2% by the financial year 2028. This improvement is expected to be supported by healthier margins and lower operating costs.
Valuation and Growth Potential
UBS stated that at 2.4 times its September 2027 estimated price to book value, the current market valuation does not fully reflect Poonawalla Fincorp’s potential growth trajectory and anticipated expansion in return on assets.However, the brokerage flagged certain risks, including any delay in equity raising and weaker than expected asset quality, which could impact the stock’s performance.
₹1,000 Crore NCD Issuance Approved
Earlier this month, Poonawalla Fincorp said its finance committee approved the issuance of secured, redeemable, rated and listed non convertible debentures worth up to ₹1,000 crore through private placement.The company plans to raise 1 lakh NCDs with a face value of ₹1 lakh each, aggregating to ₹1,000 crore. These debentures will be issued in dematerialized form and are proposed to be listed on the Bombay Stock Exchange.
Analyst Sentiment and Stock Performance
Out of nine analysts tracking the stock, four have assigned buy ratings, two have sell ratings, and one has a hold rating.Shares of Poonawalla Fincorp ended the previous session 1.6% lower at ₹460.5 apiece. The stock has gained 13.9% over the past month and risen 62.75% over the past year, reflecting strong investor interest despite recent volatility.
With UBS now initiating coverage with a bullish stance, market participants will be closely watching how the stock responds in the upcoming sessions.
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