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.