Magma Fincorp hits 5% upper circuit for 4th straight day; here's why

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Already up more than 18 percent this week, the one-year return on Magma Fincorp stock is a massive over 982 percent. So far this year, Magma Fincorp has gained an impressive 292 percent.

Magma Fincorp hits 5% upper circuit for 4th straight day; here's why
Magma Fincorp share price hit the upper circuit of 5 percent for the fourth straight day, hitting a fresh 52-week high of Rs 157.70 apiece on Thursday. Already up more than 18 percent this week, the one-year return on Magma Fincorp stock is a massive over 982 percent. So far this year, Magma Fincorp has gained an impressive 292 percent.
The uptrend in the stock follows the announcement of a new management structure for Magma Fincorp after the Poonawalla Group had taken over for Rs 3,456 crore.
On May 31, the board of Magma appointed Adar Poonawalla as the Chairman while Abhay Bhutada, who is the Chief Executive of the Poonawala 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 a statement.
Sanjay Chamria will continue as the Vice Chairman of the company and will guide the new team during the transition, the company said.
The Adar Poonawalla-controlled Rising Sun Holdings, the financial services arm of the group known globally for its vaccines, had completed the acquisition of the city-based non-bank lender last month.
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 percent and leverage at 1.3 times as of May 15.
It also said there will be more hands in the leadership team by the second quarter and that the rebranding of Magma a Poonawalla Group firm is also underway.
With the change in guard, Emkay Global Financial Services believes Magma 2.0 would be a journey of superior profitable growth, resulting in significant improvement in return ratios.
The brokerage house said that after recent fund infusion and current quarter clean-up, Magma is well-placed on adequacy, promoter back-up and liquidity fronts. It believes the company is well-placed to attract new talent from across industries which would be the biggest trigger for overall growth.
Meanwhile, during the fourth quarter fiscal 2021, Magma Fincorp reported a net loss of Rs 863.58 crore on a standalone basis due to higher write-off as against Rs 17.36 crore profit in the December 2020 quarter and Rs 4.11 crore in the year-ago quarter.

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