Billionaire Poonawalla has put the money where his mouth is⁠— housing finance and general insurance

Vaccine maker Adar Poonawala decided to take charge of Magma Fincorp and the stock spiked 10 percent

Poonawalla bought Magma Fincorp⁠ because he saw what many others didn’t: agility

Magma mainly lend money to those who buy cars, tractors and homes; and all three segments are struggling

Still, Magma Fincorp managed a strong recovery from the slump in the March-June quarter. How?

In Oct-Dec 2020, every additional rupee lent towards car loans went to those buying used cars

Similarly, it focussed on the affordable housing, where loan disbursement was back to 80 percent of pre-COVID

Govt has extended sops for affordable housing and that will benefit Magma, and therefore, Poonawala, further

The more lucrative mortgage biz has gone from a fifth of its loan book (in FY17) to a quarter in last 3 years

The company cut operating expenses by over 23 percent in the latest quarter

And the net interest margin at 8.5 percent is at the widest it has been in over two and a half years

Latest budget hiked FDI limit in insurance firms to 74 percent leaving room for more value to be unlocked

All this enticed the billionaire Poonawalla, to buy a controlling stake in the company

Now it will be called Poonawalla Finance...

...which will “further invest in its housing finance and general insurance,” the co said.

The stock of Magma Fincorp didn’t do much in the first 9 months since the pandemic broke.

​While the Nifty fin services index including likes of Bajaj Fin, HDFC along with top banks surged...

... Magma was in the shadows

But the real surge in Magma came after third quarter earnings, the stock has doubled in Feb alone

​Invest wisely

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