Target: ₹570CMP: ₹486.35Poonawalla Fincorp (PFL)’s transformation into a diversified retail lender has moved beyond the investment phase. The newer businesses have attained meaningful scale and are emerging as incremental growth drivers, supported by a wider distribution footprint, improving digital capabilities and disciplined execution.As the portfolio becomes more diversified across products, customer segments and collateral types, we expect growth to become more resilient and earnings quality to improve and operating leverage begins to offset the elevated investment spend of the past two years.The company’s profitability outlook continues to strengthen as higher-yielding businesses scale up, portfolio yields improve, and operating leverage begins to offset the elevated investment spend of the past two years.We believe PFL is transitioning from a transformation story to an earnings compounding story. The combination of multiple growth engines, improving operating efficiency, AI-led productivity gains, and strengthening asset quality should drive superior earnings growth over the next few years.We model about 43 per cent AUM CAGR and around 117 per cent PAT CAGR over FY26-28E, with RoA/RoE improving to around 2.4/17 per cent by FY28E. At 2.5x FY28E P/BV, valuations remain attractive relative to its medium-term earnings potential.We reiterate our Buy rating with a target price of ₹570, based on 3.0x Mar’28E BVPS.Published on August 11, 2026