Shares of Poonawalla Fincorp Ltd. gained over 7% on Monday, October 12, after the company reported strong second quarter results, with sharp earnings growth, healthy assets under management (AUM) expansion and improving asset quality.

The company reported its earnings after market hours on Friday, October 9. Its (AUM) increased to ?74,008 crore, up 55.1% from last year's 47,701 crore and up 10.4% from the previous quarter's ?67,054 crore.

The company's profit after tax (PAT) surged 5.1 times to ?375 crore from ?74 crore last year, while its pre-provision operating profit was up 126.6% at ?877 crore from ?387 crore.

Poonawalla Fincorp's net interest income (excluding fees) increased 80.6% to ?1,380 crore from ?764 crore in the year-ago period.

Its gross non-performing assets (GNPA) improved to 1.2% from 1.37% sequentially and from 1.59% in the previous fiscal.

Its return on assets came in at 2.18%, up 20 basis points from the previous quarter's 1.98% and 149 basis points from the prior fiscal's 0.69%.

The company's management has targeted 35% to 40% compound annual growth rate (CAGR) over the next couple of years. It expects further improvement in return on assets as well. The company's credit cost is at 2.19% and the management expects moderation as newer loan cohorts perform better.