Piramal Enterp. — Q1 FY26 earnings call

Call held 29 Jul 2025

Management summary

Piramal Enterprises delivered a strong start to FY26, characterized by robust growth in its retail franchise and the continued scale-up of Wholesale 2.0. The company is successfully transitioning away from its legacy book, which now represents only 7% of AUM. Management expressed high confidence in meeting full-year profit targets while navigating specific pockets of stress in the unsecured MSME and used car segments through proactive disbursement cuts.

Highlights

  • Consolidated Net Profit (PAT) reported at ₹276 crores, a 52% YoY growth from ₹181 crores.

  • Consolidated AUM grew 22% YoY to ~₹85,700 crores, with the 'Growth Business' now comprising 93% of total AUM.

  • Retail AUM increased 37% YoY to ₹47,101 crores, now forming 80% of the total AUM.

  • Consolidated Net Interest Margin (NIM) expanded by 10 bps QoQ to 5.9%.

  • Asset quality remained stable with GNPA at 2.8% and NNPA at 2.0%; Retail 90+ DPD maintained at 0.8%.

  • Growth business credit cost declined to 1.4% from 1.8% in the previous quarter.

  • Wholesale 2.0 AUM grew 14% QoQ to ₹10,425 crores with zero delinquencies maintained since inception.

  • Capital Adequacy Ratio (CAR) stood at 19.3%, with a ~245 bps reversal expected post-merger completion.

Key financials

  1. Consolidated Net Profit ₹276 Cr +52%YoY
  2. Consolidated AUM ₹85,700 Cr +22%YoY
  3. NIM 5.9% +1.7%QoQ
  4. GNPA 2.8%
  5. NNPA 2%
  6. Capital Adequacy Ratio 19.3%

What they filed

Q1 FY26: revenue up 18.7%, net profit up 52.5% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY24Q3 FY24Q4 FY24Q1 FY25Q2 FY25Q3 FY25Q4 FY25Q1 FY26
Revenue2,193 2,476 2,473 2,227 2,288 +4%2,825 +14%2,854 +15%2,643 +19%
Net profit48 -2,378 137 181 163 +240%39 +102%102 −26%276 +52%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Segment breakdown

SegmentAUMAUM Growth
Retail Lending₹68,560 Cr37%
Wholesale 2.0₹10,425 Cr14%
Growth Business (Retail + Wholesale 2.0)——

Guidance & targets

Profitability

  • Full Year PAT Profitability · FY26 · High confidence ₹1,300 - 1,500 crores
    For this year, to reiterate, we have guided, specifically on profits, which is INR1,300 crores to INR1,500 crores of PAT at the full year level.

    — Jairam Sridharan, CEO (Retail Lending)

  • Growth Business ROA Profitability · Medium Term · Medium confidence ~3%
    So at 1.5%, we have guided that in the medium term, that needs to get to 3%, right, or close to 3%.

    — Jairam Sridharan, CEO (Retail Lending)

Margin

  • Retail Opex to AUM Margin · Medium Term · Medium confidence 3.5% - 4.0%
    We aim to continue the strength in line with our medium-term guidance of 3.5% to 4%.

    — Jairam Sridharan, CEO (Retail Lending)

Debt

  • Debt to Equity Ratio Debt · Long Term · Medium confidence 4:1
    what we have said historically and I'll repeat, is that we think right level of leverage... is 4:1 debt to equity.

    — Jairam Sridharan, CEO (Retail Lending)

Other

  • Merger Completion Other · Q2 FY26 · High confidence September 2025
    The merger is expected to complete by September 2025.

    — Ajay Piramal, Chairman

Risks & concerns

  • MSME Unsecured Credit Deterioration

    medium

    Open market sourcing in MSME unsecured has shown deterioration; management has cut disbursements by 30% QoQ.

    Both acknowledged

  • Used Car Refinance Stress

    medium

    Unseasonal uptick in risk seen in the self-employed refinance segment of the used car business.

    Both acknowledged

  • Regulatory Impact on Fee Income

    low

    New RBI rules on prepayment charges for floating rate loans (effective Jan 2026) will impact MSME and LAP income streams.

    Management acknowledged

  • One-time Merger Costs

    low

    Expected 2-digit crore one-time costs related to legal, stamp duty, and other merger activities in Q2.

    Management acknowledged

Q&A highlights

3 direct
Reduction in Provisioning Coverage Direct
PD has just been re-grounded to our internal data. And because our internal data on secure continues to be better than market... that PD is actually falling a little bit.

Explains why provisioning ratios dropped despite AUM growth; management attributes it to superior internal asset performance vs. market data.

Asked by Avinash Singh, Emkay Global

MSME Unsecured Stress and Disbursement Cuts Direct
At Piramal from a level of INR1,200 crores of disbursement per quarter, we are now down to INR700 crores. So we've been bringing down disbursement for three quarters now.

Confirms management is proactively slowing down in risky segments (MSME open market) to prevent asset quality deterioration.

Asked by Abhijit Tibrewal, Motilal Oswal

Used Car Finance Risk Direct
In used cars, the problem is in the refinance segment. It is not in the sale purchase segment... Refinance is where the problem is.

Provides granular insight into exactly where the 'unseasonal' risk uptick is occurring within the used car portfolio.

Asked by Abhijit Tibrewal, Motilal Oswal

2 min read 5 chapters

Detailed narrative

Retail Growth Engine Sustains Momentum

Retail AUM grew 37% YoY to ₹47,101 crores, driven by the flagship mortgage business which now accounts for 68% of retail AUM. Disbursements reached ₹8,718 crores, up 28% YoY, despite seasonal weakness typically seen in the first quarter. Management attributed this outperformance to their 'multi-product strategy' and focus on middle-tier markets where competition is less intense than at the top or bottom ends.

Proactive Risk Management in Unsecured Segments

Management highlighted a deliberate slowdown in MSME unsecured lending, with quarterly disbursements dropping from ₹1,200 crores to ₹700 crores over the last three quarters. This was a response to deteriorating credit trends in open-market sourcing, whereas cross-sell MSME business continues to perform well. Similarly, they identified stress in the used car refinance segment and are monitoring it closely, while maintaining a 'neutral' stance on digital loans backed by FLDG protection.

Wholesale 2.0: A Clean Slate Scaling Up

The Wholesale 2.0 portfolio grew 14% QoQ to ₹10,425 crores, maintaining its track record of zero delinquencies since inception. Disbursements for the quarter were ₹2,302 crores, a 35% increase QoQ, with an average ticket size of ₹74 crores. The book is well-diversified across real estate (70-75%) and corporate mid-market lending, featuring an effective interest rate of 14.5%.

Operational Efficiency and NIM Expansion

Consolidated NIM improved by 10 bps QoQ to 5.9%, aided by the reducing drag of the legacy business. Opex to AUM for the growth business moderated to 3.9% from 4.5% a year ago, reflecting the maturing branch network and investments in technology/AI. Management expects further efficiency gains, targeting a medium-term retail opex ratio of 3.5% to 4%.

Strategic Merger and Capital Re-alignment

The merger of Piramal Enterprises with Piramal Finance is on track for completion by September 2025. This corporate simplification is expected to reverse approximately 245 basis points of the recent capital adequacy reduction (currently at 19.3%). Post-merger, the company will also benefit from significant carry-forward tax losses, which will align PBT and PAT figures for the foreseeable future.

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