Poonawalla Fincorp Limited , a prominent player in the financial services sector, has announced its decision to exercise the call option on its unsecured non-convertible perpetual bonds. This move, detailed in a recent corporate filing, outlines the company's strategy for managing its debt instruments.

Bond Redemption Details

Poonawalla Fincorp will redeem 40 unsecured non-convertible perpetual bonds, each valued at Rs 5 lakh, for a total of Rs 2 crore. These bonds, which were issued on September 18, 2015, carry a 12.10% interest rate. The company has set the redemption date for September 18, 2025, with September 3, 2025, established as the record date for determining eligible bondholders.

Key Points of the Redemption

Call Option and Interest Rate

The company's decision to exercise the call option comes at the 10-year mark from the bond's issuance date, which is the minimum period required before the option could be exercised. Had Poonawalla Fincorp chosen not to exercise this option, the interest rate would have increased by 100 basis points to 13.10% annually for subsequent years.

Payment Process

Poonawalla Fincorp has confirmed that the redemption amount, which includes the face value of the bonds along with accrued interest, will be paid to bondholders by crediting their bank accounts linked to their respective demat accounts. Following the payment, the bonds will be fully extinguished.

Regulatory Compliance

In compliance with regulatory requirements, Poonawalla Fincorp has notified Catalyst Trusteeship Limited, the debenture trustee, and the bondholders about its intent to exercise the call option. The company has also informed the stock exchanges as per the Securities and Exchange Board of India (SEBI) regulations.

Impact on Bondholders

Bondholders are advised to ensure their bank account details linked to their demat accounts are up to date to facilitate smooth processing of the redemption amount. The company has emphasized that no claims will be entertained after the redemption of these bonds.

This strategic move by Poonawalla Fincorp to redeem these perpetual bonds demonstrates the company's proactive approach to managing its debt instruments and optimizing its financial structure.

Poonawalla Fincorp Limited (PFL), a leading NBFC focused on consumer and MSME lending, has reported robust growth and significant technological advancements in its recent quarterly results and corporate announcements.

Strong AUM Growth and Financial Performance

PFL's Assets Under Management (AUM) grew by an impressive 53% year-on-year and 15.8% quarter-on-quarter, reaching Rs. 41,273.00 crores. The company's total disbursements for the quarter increased by 13.6% quarter-on-quarter to Rs. 10,651.00 crores, indicating strong momentum across its product lines.

Improved Credit Costs and Asset Quality

The company reported a significant improvement in credit costs, which decreased by 53 basis points to 2.61% for all businesses. Notably, the credit costs for 12 core products, excluding STPL (Short Term Personal Loans), stood at 1.43%. This improvement reflects PFL's robust credit underwriting and risk management practices.

Asset quality remained stable, with:

• Gross Non-Performing Assets (GNPA) at 1.84%
• Net NPA at 0.85%
• Provisioning coverage ratio at 53.93%

These figures indicate a conservative approach to potential credit risks.

Strategic Capital Infusion and Liability Management

In a significant move, PFL's Board of Directors approved a Rs. 1,500.00 crores equity capital infusion from promoters at Rs. 452.50 per share. This capital infusion is expected to strengthen the company's balance sheet and support its growth plans.

The company has also made strides in diversifying its liability mix, increasing the share of Non-Convertible Debentures (NCDs) in total borrowings from 7% to 24% during the quarter. This shift towards long-term funding sources is aimed at optimizing the cost of borrowings and improving overall financial stability.

Expansion of Product Portfolio and Distribution Network

PFL has shown healthy momentum in its newly launched business segments, including:

• Prime Personal Loans
• Gold Loans
• Consumer Durables
• Commercial Vehicle Loans
• Education Loans

The company has already expanded its gold loan network to 80 operational branches across Gujarat, Haryana, Rajasthan, and Maharashtra, with plans to reach 400 branches by March 2026.

Deployment of AI Solutions

PFL revealed the deployment of four AI-led solutions across its operations and finance functions:

1. An Agentic AI solution for Data Quality Index (DQI) to enhance operational data integrity.
2. An AI-powered Infrastructure Management Solution to streamline property acquisition for branch expansion.
3. A proprietary Fin-Bot for advanced financial intelligence and analysis.
4. An AI-led Invoice Management System to automate and expedite invoice processing.

These AI initiatives are part of PFL's broader strategy to embed intelligence across its operations, aiming to enhance decision-making, improve efficiency, and drive innovation.

Future Outlook

Arvind Kapil, Managing Director & CEO of Poonawalla Fincorp, expressed confidence in the company's growth trajectory and risk management approach. He stated, "We are very conscious of the commitments that we make. With this, I would like to reiterate our confidence in our high growth trajectory, maintaining a balance and sensible risk level."

The company expects to:

• Maintain healthy AUM growth in the coming quarters, likely exceeding its guidance of 35%-40% for the financial year.
• See its Net Interest Margins (NIMs) return to around 9% within the next 3-4 quarters as it continues to recalibrate its portfolio mix.

With its strong financial performance, strategic initiatives in AI and digital transformation, and expansion plans, Poonawalla Fincorp appears well-positioned for sustained growth in the competitive NBFC sector.