Magma Fincorp hits upper circuit after top management rejig

NEW DELHI: Shares of Magma Fincorp hit upper circuit during the early trade on Tuesday, after the announcement of a new management structure for the company. The Poonawalla Group has appointed a new chairman, managing director, and a chief executive.

The Adar Poonawalla-controlled Rising Sun Holdings, the financial services arm of the group had completed the acquisition of the city-based non-bank lender in last month for Rs 3,456 crore.

Magma Fincorp's share gained 5 per cent to Rs 143.05 on Monday. BSE Sensex was trading at 274.46 points or 0.53 per cent higher at the time of writing this copy. The scrip settled at Rs 136.25 on Monday.

The NBFC reported widening of its consolidated net loss to Rs 647.72 crore for the last quarter of FY21 on accelerated write-offs and provisions. The company had posted a net loss of Rs 355.08 crore during the January-March period of FY20. However, there was a net profit of Rs 13 crore in the quarter ended December 2020.

For the full year 2020-21, the non-banking lender reported a loss of Rs 558.96 crore as against a profit of Rs 27.05 crore in 2019-20. Income during the year also fell to Rs 2,352.48 crore from Rs 2,562.88 crore. The interest income was down at Rs 2,165.68 crore as against Rs 2,324.34 crore.

Magma Fincorp has delivered stellar returns in the last one year. The counter has soared over 1,000 per cent to Rs 147.90 in May 2021, from merely Rs 13.70 in June 2020.

The board of Magma appointed Adar Poonawalla as the Chairman while Abhay Bhutada, who is the Chief Executive of the Poonawalla Finance, will be the Managing Director. Vijay Deshwal, a seasoned banker with a track record of over two decades, will take over as the Chief Executive of Magma Fincorp from July, according to the statement.

With the acquisition, the balance sheet of the NBFC has been strengthened significantly through the equity infusion, with the tier-1 capital adequacy ratio standing at 66.8 per cent and leverage at 1.3 times as of May 15.

The company is likely to add more hands in the leadership team by the second quarter and that the rebranding of Magma- a Poonawalla Group firm is also underway. Magma has improved its operating performance in the financial year 2020-21 and reported an increase in NIMs, reduction in cost of funds.