Piramal Finance Limited — Q1 FY27 earnings call

Call held 16 Jul 2026

Management summary

Piramal Finance delivered a strong Q1 FY27, marked by robust AUM and PAT growth, and improved profitability metrics. The company maintained stable asset quality across most segments, though early stress signals in the IT sector and high wholesale prepayments are under close watch. Strategic initiatives like gold loan branch expansion and AI adoption are progressing, with management confident in achieving FY27 targets.

Highlights

  • Total AUM grew by 25% year-on-year to Rs. 107,000 crores, with Growth AUM increasing by 32% year-on-year.

  • PAT was up 67% year-on-year to Rs. 461 crores, with underlying Growth business PBT of Rs. 470 crores.

  • Growth business ROAUM improved to 1.9% in Q1 FY27 from 1.5% in Q1 FY26, driven by a 57-basis point improvement in OPEX ratio.

  • Cost to Income Ratio significantly improved to 53% in Q1 FY27, down from 66% in Q1 FY26 and 72% in Q1 FY25.

  • Asset quality remained stable with retail 90+ delinquencies at 0.7% and Growth business credit cost broadly stable at 1.6% per annum.

Concerns

  • A mild uptick in secured lending risk, particularly in mortgages, was observed, returning to Q3 levels.

  • Early signs of stress (bounces from current) were noted in IT sector salaried customers, particularly in Southern markets, prompting increased monitoring.

  • Wholesale business experienced elevated prepayments, with 61% of FY27 contractual repayments already received, acting as a growth headwind.

Key financials

  1. Total AUM ₹1.07L Cr +25%YoY
  2. PAT ₹461 Cr +67%YoY
  3. Growth Business ROAUM 1.9%
  4. Cost to Income Ratio 53%
  5. NIM (Consolidated) 6.5% +0.47%YoY
  6. Capital Adequacy 18.9%

What they filed

Q1 FY27: revenue up 27.6%, net profit up 67.0% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue2,365 2,825 2,854 2,639 2,872 +21%2,918 +3%3,424 +20%3,368 +28%
EBITDA1,429 1,451 1,317 1,721 1,949 +36%1,935 +33%1,446 +10%2,073 +20%
Net profit163 39 102 276 327 +101%401 +928%502 +392%461 +67%
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

Share of AUM
₹1.87L Cr Total
  • Retail AUM ₹91,249 Cr 48.8%
  • Mortgage Business AUM ₹61,199 Cr 32.7%
  • Unsecured Products AUM ₹21,412 Cr 11.4%
  • Wholesale AUM ₹13,238 Cr 7.1%

Capital allocation

high confidence
  • Liquidity Liquidity disclosed Board approved a fund-raise of up to Rs. 4,000 crores. Regulatory capital adequacy is 18.85%, with a target to stay above 18%.
    Along with Q1 results, the board also approved a fund-raise of up to Rs. 4,000 crores, which the company would plan to raise at an appropriate time post shareholder approval. ... Our regulatory capital today is at about 18.85%. Last year on average, we consumed about 63 basis points on average per quarter. So basically, we have mentioned to you all in the past as well that while regulatory requirement on capital adequacy is 15%, as a management team, we would feel a lot more comfortable if we stayed above 18%.

Guidance & targets

Profitability

  • Growth Business ROAUM Profitability · exit Q4 FY27 · High confidence 2.5%
    This year, we've started at 1.9% or 1.8% if you remove POCI and kind of we've guided for 2.5% for Q4. I feel pretty strongly, pretty good about our ability to kind of hit there.

    — Jairam Sridharan

Leverage

  • AUM to Equity Leverage · long-range goal · Medium confidence 4.5x to 5x
    Leverage, i.e., AUM to equity, also continues to increase as you can see on this page, and it is at 3.7x at the end of Q1. This compares to 3.2x in the same quarter last year, and we continue to progress towards our goal of 4.5 to 5x.

    — Jairam Sridharan

Branch Network

  • Gold Loans Branches Branch Network · end of March 2027 · High confidence 200 branches

    From 67 branches today

    From our first 22 branches opened in Q4, our gold loans network expanded to 67 branches at the end of Q1. We have now started launching the phase two of our gold loans network, and we aim to take this business to 200 branches by the end of March 2027.

    — Jairam Sridharan

Operating Efficiency

  • Retail OPEX to AUM Operating Efficiency · next four to five quarters · Medium confidence further lower by 40-50 bps
    I believe another 40, 50 basis points of value can be extracted from here over the next four to five quarters.

    — Jairam Sridharan

Branch Penetration

  • Salaried PL Branch Penetration Branch Penetration · next two to three quarters · High confidence 100%
    My intention is to get to 100% branch penetration on PL over the next two to three quarters. You should expect to see significant improvement in that number in the next two quarters.

    — Jairam Sridharan

What to watch in Q2 FY27

Growth Business ROAUM Trajectory

next quarter
Current 1.9% in Q1 FY27
Target Progress towards 2.5% by exit Q4 FY27

Why it matters

Key indicator of profitability improvement and achievement of full-year guidance.

This year, we've started at 1.9% or 1.8% if you remove POCI and kind of we've guided for 2.5% for Q4.

Risks & concerns

  • Stress in IT Sector Salaried Customers

    medium

    Early signs of stress (bounces from current) observed in IT sector salaried customers, particularly in South markets, more visible in secured products.

    The IT sector is one we are watching very closely. We are seeing some signs of increasing stress in this segment in recent months. Surprisingly, the stress is a bit more visible in secured products at present.

    Management acknowledged

  • Elevated Prepayments in Wholesale Business

    medium

    61% of contractual repayments due in FY27 have already been paid, acting as a major growth headwind for the wholesale business.

    61% of contractual repayments due to us in FY27 have already been paid by our borrowers to us as of today. The strong prepayment trend continues as we have seen over the past few quarters as well, and is providing to be a major growth headwind for our wholesale business.

    Management acknowledged

  • Mild Uptick in LAP Delinquencies

    low

    Small sequential rise in LAP 90 DPD in Q1, attributed to idiosyncratic cases, but management is monitoring closely.

    On LAP... in Q1 again, you see a small uptick. I don't know, is the honest answer. Like I don't know whether there is anything worth kind of you know, worrying about. Right now, I know the exact cases and there are four cases which have caused this uptick.

    Management acknowledged

Q&A highlights

8 direct
Stress in Salaried Customer Segment and Digital Loan Book Direct
On your first one, my discomfort is not with salaried segment overall. It's a little bit pointed towards IT sector salaried customers, particularly in South markets... The business here depends on level of activity in the Fintech sector... 80% plus of this business that we do is under the FLDG framework, so essentially the credit risk impact on our portfolio is minimal.

Management clarified specific areas of stress within the salaried segment and explained the low credit risk of the digital loan book due to the FLDG framework.

Asked by Shreya Shivani

ROAUM Target and Wholesale Repayments Direct
This year, we've started at 1.9% or 1.8% if you remove POCI and kind of we've guided for 2.5% for Q4. I feel pretty strongly, pretty good about our ability to kind of hit there... In real estate particularly the underlying assets generating cash is trapped and since these are not operating companies, rather asset monetization which funds the repayments and therefore, in a way we incentivize the borrowers to prepay should they be running ahead of underwriting and that's what's happening.

Management reiterated confidence in achieving the 2.5% ROAUM target by Q4 FY27 and detailed the drivers behind high wholesale prepayments.

Asked by Abhijit Tibrewal

Disbursement Yield vs. Portfolio Yield and Customer Profile Direct
Disbursement yields are always going to be higher than portfolio yields because portfolio yields depend on AUM and disbursement yields tend to be higher on shorter duration products... The page 24, when it actually shows the profile of customers, which is for all branch-based customers. So that is HL, LAP, UBL, UCL, personal loans, everything put together.

Clarified the mathematical reason for the yield difference and corrected a misunderstanding about customer profile data, emphasizing no concentration risk in HL.

Asked by Suraj Das

Co-lending Arrangement Mechanics and Rating Upgrade Impact Direct
The way our co-lending business works is with mostly it's smaller ticket, short duration, and it is mostly on an FLDG basis, 80 plus percent of it is on an FLDG basis. When an account gets to 90 plus, within 30 days, we recover the money from our partner... You're absolutely right that lower risk but a larger ticket businesses allow us to move up on leverage.

Detailed the risk mitigation in co-lending and confirmed that the AA+ rating allows for higher leverage, impacting future strategy.

Asked by Avinash Singh

Capital Raise Rationale and Opex Management Direct
Our regulatory capital today is at about 18.85%... we would feel a lot more comfortable if we stayed above 18%... our book grew let's say 25%, our revenue lines grew something like 40 odd percent, and our opex line grew 10%, right? So you can see that our opex is growing significantly slower than our revenues are growing.

Explained the need for a capital raise despite current adequacy and demonstrated strong operating leverage with Opex growing slower than revenue.

Asked by Piran Engineer

LAP 90 DPD Trend and IT Sector Stress Signals Direct
On LAP... in Q1 again, you see a small uptick... I don't know whether there is anything worth kind of you know, worrying about. Right now, I know the exact cases... It's more for the seasoned pool, but these are early-stage risk. So, I'm not talking 90+ or something. I'm talking kind of bounces from current.

Management acknowledged a small uptick in LAP delinquencies but attributed it to idiosyncratic cases, while clarifying IT sector stress is early-stage, not deep delinquency.

Asked by Nischint

Mortgage Competition and NIM Compression Direct
I'm not seeing a whole lot of new HFCs being created... The big increase in competition is the emergence of Piramal over the last, you know, four-five years... The slowdown in DA also reduces NIM. And that's a choice we exercise. Sorry, just to be super clear, how much DA we do is a little bit of a choice. DA is a pinch hitter.

Management downplayed new competition in mortgages, stating Piramal itself is a disruptor, and explained NIM compression as a strategic choice to reduce direct assignment transactions.

Asked by Anand Dama

Provision Coverage Ratio (PCR) Trajectory Direct
PCR is an output, not an input to our decision-making. The reason PCR has increased in this quarter is that we have chosen to actually increase some of our ECL model assumptions and some of the kind of, you know, minimum floors on provisions... If the stage three is dominated by housing, your PCR will be low. If it is dominated by unsecured, PCR will be high.

Clarified that PCR is a result of provisioning choices and portfolio mix, not a direct target, and explained the factors influencing its movement.

Asked by Subramanian K

2 min read 6 chapters

Detailed narrative

Robust AUM and Profitability Growth

Piramal Finance reported a strong Q1 FY27, with total AUM growing 25% year-on-year to Rs. 107,000 crores. The underlying Growth AUM, excluding discontinued legacy business, increased by 32% year-on-year. This growth translated into a 67% year-on-year increase in PAT, reaching Rs. 461 crores, with the Growth business contributing Rs. 470 crores to PBT. The ROAUM for the Growth business improved to 1.9% in Q1 FY27 from 1.5% in Q1 FY26, demonstrating enhanced profitability.

Improved Operating Efficiency

The company showcased significant improvements in operating efficiency, with the Cost to Income Ratio falling to 53% in Q1 FY27, a notable reduction from 66% in Q1 FY26 and 72% in Q1 FY25. Retail OPEX to AUM further declined by 10 basis points quarter-on-quarter to 3.5% in Q1. Management expects to extract another 40-50 basis points of value from Retail OPEX to AUM over the next four to five quarters, indicating continued focus on cost optimization.

Stable Asset Quality with Emerging Concerns

Asset quality remained largely stable, with retail 90+ delinquencies at 0.7%, consistent within the 0.6-0.8% range over the last four years. Stage two and stage three assets were below 0.2%, and the Growth business credit cost was broadly stable at 1.6% per annum. However, a mild uptick in secured lending risk, particularly in mortgages, was observed, and early signs of stress were noted in IT sector salaried customers in Southern markets, which the company is closely monitoring.

Strategic Capital Raise and Leverage Targets

The board approved a fund-raise of up to Rs. 4,000 crores to support future growth. The company's capital adequacy stood at 18.85% as of June end 2026, above the internal comfort target of 18%. Leverage (AUM to equity) increased to 3.7x from 3.2x in Q1 FY26, with a long-term goal of 4.5x to 5x. The recent AA+ rating upgrade is expected to further enhance the ability to achieve higher leverage.

Wholesale Business Dynamics and NIM Management

Wholesale AUM grew 27% year-on-year to Rs. 13,238 crores, with a 70-30 mix between real estate and mid-market lending. Disbursements in Q1 FY27 were Rs. 2,604 crore. However, elevated prepayments, with 61% of FY27 contractual repayments already received, posed a growth headwind. The consolidated NIM was 6.5%, flat quarter-on-quarter, with the Growth business NIM at 6.8%. A strategic choice to reduce direct assignment transactions impacted NIM by 17-20 bps this quarter.

Retail Expansion and AI Adoption

The retail customer franchise grew 24% year-on-year to 6 million. The company expanded its branch network by 79 branches to 780, with gold loan branches growing to 67. Piramal Finance aims to expand its gold loan network to 200 branches by March 2027 and achieve 100% branch penetration for salaried personal loans within the next 2-3 quarters. AI token usage surged to 320 billion tokens in Q1 FY27, up from 63 billion in Q1 FY26, demonstrating deep integration of AI across business processes.

This is an AI-generated summary of a publicly available earnings call transcript.
View original transcript

More Financial Services earnings calls