Detailed Narrative
Robust Financial Performance and AUM Growth
Piramal Finance delivered a strong Q3 FY26, with total AUM growing 23% year-on-year to INR 96,690 crores. The 9-month FY26 consolidated PAT significantly increased to INR 1,004 crores, up from INR 383 crores in the prior year, without major one-off📎 gains. The Growth business PBT for Q3 stood at INR 427 crores, marking a 101% year-on-year growth over INR 212 crores in Q3 FY25.
Pivotal Credit Rating Upgrade and Cost of Funds
A significant development was the upgrade to an AA+ credit rating for long-term debt from CRISIL. This upgrade is expected to potentially lower the company's cost of borrowing by 50-80 basis points once the current debt stack is churned. The company has already experienced a 25 basis points transmission in its cost of borrowing in the current rate-cut cycle and anticipates a further 25 basis points reduction in the months ahead.
Retail and Wholesale Business Momentum
Retail AUM grew 34% year-on-year, with the mortgage business (housing loans and LAP) growing 35% to INR 53,958 crores, constituting 56% of total AUM. Wholesale 2.0 AUM also saw a 35% year-on-year increase to INR 12,047 crores. Retail disbursements for the quarter were INR 10,498 crores, flat QoQ, which management attributed to an internal process-driven cyclicality rather than market conditions, expecting a rebound in Q4.
Enhanced Operating Efficiency and Profitability
Consolidated margins expanded by 51 basis points year-on-year to 6.3%, with Growth business margins remaining stable QoQ. The retail opex to AUM ratio further improved, decreasing by 10 basis points QoQ to 3.8% in Q3. This improvement occurred despite a INR 35 crores cost impact in Q3 due to the new labor code, which was absorbed by the efficient opex ratios. The company aims to further reduce this ratio to a target of 3.25% to 3.75%.
Stable Asset Quality and Targeted Risk Management
The company maintained stable asset quality, with 90-day delinquencies stable QoQ and Growth business credit costs down 10 basis points QoQ to 1.6%. Retail 90+ DPD remained within the narrow range of 0.8%. While low-ticket LAP (less than INR 10 lakh) continues to struggle, leading the company to exit this segment, and used car loans saw an uptick in H1, recent originations show improved quality and expected stabilization.
Strategic Branch Expansion and Future Growth Outlook
Piramal Finance plans to open approximately 100 new branches in Q4 FY26, including 20 gold loan and 55 microfinance branches, to drive growth in these identified white spaces. The company is on track to achieve its FY26 AUM target of over INR 1 lakh crores and aims for over INR 1.5 lakh crores by FY28, with a long-term goal of 3% RoAUM and 4.5x-5x leverage.
Management Transition and Non-Core Asset Monetization
The company announced the departure of Jagdeep Mallareddy (CEO Retail) and Sunit Madan (COO), with Imtiaz Ahmed and Vikas Arora taking over as Chief Business Officer and COO, respectively, effective April 1, with a smooth transition expected. Piramal also announced the monetization of its stake in Sriram Life Insurance for INR 600 crores, expected to conclude in Q4, with further monetization of other investments anticipated in coming quarters.
DHFL Liabilities Management and Refinancing Strategy
The remaining DHFL liabilities stand at approximately INR 15,000 crores, carried at an effective yield of 7.37%. The company plans to refinance the upcoming large tranche of principal repayments next year through NCDs. Management expects the replacement to be non-meaningfully negative due to the improved credit rating, ensuring stability in the overall cost of borrowing.