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Strategic Growth and Innovation in a Non-Banking Finance Company

Poonawalla Fincorp Ltd has made significant strides in the third quarter of FY25, with impressive growth in both disbursements and assets under management (AUM). Despite facing some financial setbacks, particularly with asset quality, the company is adopting forward-looking strategies. A key focus is the integration of Artificial Intelligence (AI) in its human resources (HR) processes, a move that positions Poonawalla Fincorp as a technology-driven financial services provider.



Strong Q3 Growth Drives Investor Confidence

In the third quarter of FY25, Poonawalla Fincorp saw substantial growth in its financial metrics. Disbursements for the quarter reached ₹7,150 crore, reflecting a 13.3% increase compared to the previous quarter. This surge showcases the company’s continued success in expanding its lending portfolio. Alongside this, Poonawalla Fincorp’s assets under management grew by 41%, reaching ₹30,950 crore, a solid indicator of its long-term growth potential.

Additionally, the company achieved a 9% quarter-on-quarter growth in AUM, further emphasizing its strong performance. The liquidity position is also robust, with ₹4,800 crore in reserves, giving Poonawalla Fincorp the capacity to scale its operations. These developments contributed to a rise in its stock price, which surged over 3% to ₹329.85, boosting investor confidence.

Navigating Challenges with Asset Quality

While Poonawalla Fincorp’s growth trajectory remains strong, it faces challenges with asset quality. The company reported a net loss of ₹471 crore in the September quarter, a sharp decline from the ₹854.6 crore profit recorded in the same period last year. A major factor behind this loss was the rise in non-performing assets (NPA), which increased to 2.1% from 0.67%.

Despite the setback in profitability, Poonawalla Fincorp’s net interest income (NII) rose 17.5% year-on-year to ₹558.4 crore, reflecting continued growth in its core business. However, the deterioration in asset quality poses risks that the company will need to address. The Reserve Bank of India (RBI) also imposed a ₹10 lakh fine on the company for non-compliance with regulations, highlighting areas for operational improvement.

Leveraging AI for HR Innovation

Poonawalla Fincorp is embracing Artificial Intelligence (AI) to transform its HR processes. The company has introduced AI-driven solutions to streamline recruitment, reduce biases, and enhance decision-making accuracy. By utilizing AI technologies such as machine learning and natural language processing, Poonawalla Fincorp aims to make its hiring process more efficient and data-driven.

The adoption of AI in recruitment reflects Poonawalla Fincorp’s commitment to innovation. AI offers a more objective approach to hiring, ensuring that decisions are based on data rather than subjective opinions. This strategic shift also allows the company to identify the best talent in a competitive market, positioning Poonawalla Fincorp as a forward-thinking employer.

AI’s Role in Risk Management and Employee Engagement

Beyond recruitment, Poonawalla Fincorp is using AI to manage HR-related risks, such as employee retention and satisfaction. By analyzing employee data, AI can help predict potential issues and offer solutions before they escalate. This proactive approach enables the company to maintain a healthy workforce and improve overall employee engagement.

AI tools can detect early signs of dissatisfaction or disengagement, allowing Poonawalla Fincorp to address concerns promptly. By predicting these issues, the company can take corrective actions to improve employee retention and performance. This use of AI in risk management is another example of how Poonawalla Fincorp is leveraging technology to enhance its internal operations and overall efficiency.

Looking Ahead: Growth and Technological Transformation

Poonawalla Fincorp’s focus on both financial growth and technological innovation positions it well for the future. The company’s third-quarter performance shows robust growth, while its efforts to integrate AI into HR practices demonstrate a forward-thinking approach. While challenges with asset quality remain, Poonawalla Fincorp’s solid liquidity and commitment to innovation provide a strong foundation for overcoming these hurdles.

The integration of AI is a critical part of the company’s long-term strategy. It allows Poonawalla Fincorp to stay ahead of the competition, streamline its operations, and improve employee satisfaction. As the company continues to evolve, its ability to balance growth with technological advancements will be key to its ongoing success.

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