Poonawalla Fincorp taps into India’s gold rush with 400-branch expansion plan

Poonawalla Fincorp forays into gold loan business, plans 400-branch rollout to target underserved markets

Poonawalla Fincorp Limited, a Cyrus Poonawalla Group-promoted non-banking financial company (NBFC), has officially entered the competitive gold loan segment as part of a broader strategy to strengthen its secured lending portfolio. The launch marks a significant development for the company, which seeks to address rising demand for secured credit products across underserved regions of India.

According to the company’s April 15, 2025 announcement, the gold loan product is now available and will be rolled out through 400 new branches over the next four quarters, with a clear focus on Tier 2 and Tier 3 cities. This expansion aims to deepen financial inclusion while capitalising on the cultural and economic importance of gold as a financial asset in Indian households.

Why is Poonawalla Fincorp entering the gold loan market now?

India’s gold loan market is among the most resilient and rapidly growing secured lending segments. Driven by the dual appeal of cultural affinity and liquidity, gold-backed loans are particularly prominent in rural and semi-urban areas, where formal credit access remains constrained. The market is expected to exceed ₹6 trillion by FY2026, with robust growth across agricultural, business, and personal use cases.

In this context, Poonawalla Fincorp’s decision to launch a gold loan product aligns with a broader NBFC industry trend toward reducing exposure to high-risk unsecured lending, while diversifying into low-risk asset-backed lending. The company’s widespread presence across 18 states and two Union Territories provides it with a ready platform to scale this offering efficiently.

What does the new gold loan product offer borrowers?

The gold loan product is designed to offer quick, secure, and flexible financial access without requiring customers to part with their physical gold. Approvals are promised in under 30 minutes, with minimal documentation and multiple repayment options tailored to varied borrower needs.

Managing Director and CEO Arvind Kapil stated that the product reflects a balance between traditional value and modern convenience. He emphasized that the company developed the offering with customer asset safety and transparency at its core, ensuring that borrowers experience reliability, trust, and simplicity in every transaction.

By integrating risk-first governance with premium service delivery, Poonawalla Fincorp positions its gold loan product as both a strategic asset and a customer engagement tool, capable of building lifetime relationships and cross-selling higher-value products in future.

How will Poonawalla Fincorp scale its gold loan offering across India?

The company’s phased rollout plan will see the opening of 400 branches across smaller towns and emerging cities, areas often underserved by traditional financial institutions. This branch-led model will be complemented by a team of industry professionals providing localised service and tailored credit solutions, aimed at enhancing customer trust and loyalty.

In addition to its branch expansion, Poonawalla Fincorp’s digital platform, including a mobile app and online loan servicing tools, will play a key role in driving engagement, especially in remote or digitally connected rural areas. This hybrid model of high-touch and high-tech service delivery seeks to build long-term market share in a segment where relationship-based trust is crucial.

How does the gold loan initiative fit into the company’s overall strategy?

Poonawalla Fincorp’s gold loan entry builds on its existing diversified portfolio, which includes personal loans, business loans, vehicle finance, loans against property, professional loans, and education loans. With an asset under management (AUM) of approximately ₹35,550 crore as of March 31, 2025, the company continues to prioritize a risk-mitigated growth strategy rooted in asset-backed financing.

The gold loan vertical is seen as a stabilising addition that can provide counter-cyclical returns and relatively lower delinquency rates. It also allows for deeper customer acquisition in new regions, where gold-backed credit often serves as an entry-level financial product for new-to-credit borrowers.

By positioning the gold loan offering as a customer-first product with transparent valuation, strong governance, and quick disbursals, Poonawalla Fincorp is reinforcing its brand ethos of combining trust with financial innovation.

What is the current market sentiment around Poonawalla Fincorp’s stock?

Investor sentiment toward Poonawalla Fincorp Limited remains cautiously optimistic, buoyed by strong technical indicators but tempered by high valuation concerns. As of April 15, 2025, the stock is trading at ₹366.30, marking a 4.03% gain from its previous close. The stock has returned 16.53% year-to-date, outperforming many sectoral peers.

However, valuation metrics indicate caution. The stock’s price-to-earnings (P/E) ratio stands at 140.59—significantly higher than the industry average of 30.21—raising questions about overvaluation. Moreover, the current market price is 234% above estimated fair value, which stands at ₹109.71, according to equity research aggregators.

Analyst recommendations remain mixed. Two analysts rate the stock as a ‘Strong Buy’, while three suggest a ‘Sell’, and one recommends a ‘Hold’. The consensus target price is ₹340, implying a potential downside from current levels.

Technical charts paint a more bullish picture, with multiple moving averages (MA5 to MA200) indicating upward momentum. The Relative Strength Index (RSI) sits near 69, bordering on overbought territory, but still reflecting strong buying activity. Short-term traders may find tactical opportunities, with breakout levels expected around ₹400 and stop-loss zones near ₹350.

In light of these dynamics, the stock may be suitable for ‘Hold’ positions for long-term investors, with caution advised on fresh entries until valuation multiples normalise or earnings catch up to current pricing.

How does this launch reshape competition in the gold loan space?

With this expansion, Poonawalla Fincorp enters a market long dominated by legacy players like Muthoot Finance and Manappuram Finance, along with growing participation from commercial banks such as HDFC Bank and ICICI Bank. However, its modern governance, digital-first strategy, and expansion into less-penetrated Tier 2 and Tier 3 regions give it a differentiated positioning.

By focusing on the customer journey, speed of delivery, and secured lending governance, the company is likely to attract customers looking for alternatives to traditional lenders. In addition, gold’s counter-cyclical nature ensures that this new vertical could help hedge risks across Poonawalla Fincorp’s broader lending portfolio.

This gold loan initiative continues the company’s transformation journey since its rebranding from Magma Fincorp, reflecting a focused effort to become a leading retail-focused NBFC with a strong foothold in both urban and emerging markets.