Piramal Finance Limited — Q4 FY26 earnings call

Call held 27 Apr 2026

Management summary

Piramal Finance delivered a strong Q4 and full year FY26, surpassing profit targets and achieving significant AUM growth, particularly in its retail segment. The company demonstrated robust asset quality, expanding NIM, and a strong capital position, while strategically utilizing one-time gains to strengthen its balance sheet. Management provided optimistic FY27 guidance for AUM and profit growth, emphasizing continued focus on operational efficiency and leveraging its upgraded AA+ credit rating.

Highlights

  • Total AUM grew 25% YoY and crossed the INR1 lakh crores mark, reaching INR1,01,230 crores.

  • FY26 Consolidated Net Profit was INR1,506 crores, a 3x increase YoY, exceeding the target of INR1,300-1,500 crores.

  • Retail business AUM grew 33% YoY to INR85,885 crores, now comprising 85% of total AUM, with retail opex ratios lowered and risk tightly controlled.

  • Consolidated Net Interest Margin (NIM) expanded 20 bps QoQ to 6.5%, driven by a decline in the cost of borrowing by 11 bps QoQ to 8.84%.

  • Asset quality remained robust with Growth business credit cost at 1.5% and total GNPA down 30 bps QoQ to 2.3%, while Wholesale 2.0 reported zero NPAs.

Concerns

  • Q4 FY26 fee income was low due to a one-time reversal for an associate company, though management expects it to be restored.

  • Geopolitical disruptions in the Gulf have created a volatile global macroeconomic environment, with potential impact on certain sensitive sectors, though currently contained.

Key financials

3 periods

Headline

  • Total AUM
    ₹1.01L Cr
    YoY +25%
  • Net Worth
    ₹28,191 Cr
  • Cash and Cash Equivalents
    ₹8,640 Cr

Q4 FY26

  • Consolidated Net Profit
    ₹502 Cr
    YoY +392%
  • Growth Business RoAUM
    2.1%
  • Consolidated NIM
    6.5%
    QoQ +0.2%
  • Cost of Borrowing
    8.8%
    QoQ -0.11%
  • Growth Business Credit Cost
    1.5%
    QoQ -0.1%
  • Total GNPA
    2.3%
    QoQ -0.32%
  • Total NNPA
    1.6%
    QoQ -0.3%
  • Capital Adequacy
    19.8%
  • LCR
    450%

FY26

  • Consolidated Net Profit
    ₹1,506 Cr
    YoY +200%

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

SegmentShare of Total AUMBook Size
Retail Business85%—
Wholesale 2.0 Business—₹12,538 Cr
Legacy Book3%₹2,807 Cr

Capital allocation

high confidence
  • M&A Piramal Imaging Divestment · Closed · Consideration $148 Mn

    Deferred consideration proceeds received, used to strengthen balance sheet

    Proceeds used for balance sheet strengthening and pre-empting future losses.

    In Q4, we received deferred consideration proceeds of $148 million towards the sale of Piramal Imaging.
  • M&A Shriram Life Insurance Divestment · Closed · Consideration ₹600 Cr

    Stake sale proceeds received, used to strengthen balance sheet

    Proceeds used for balance sheet strengthening and pre-empting future losses.

    We also concluded the stake sale of Shriram Life Insurance worth INR600 crores.
  • Liquidity Cash ₹8,640 Cr LCR in Q4 was 450%. CPs form less than 1% of liability stack, minimizing liquidity risk and maximizing opportunity from falling short-end rates.
    Our average quarterly LCR in Q4 was 450%. We have cash and cash equivalents of INR8,640 crores, equivalent to 8% of all our assets. CPs form less than 1% of our liability stack as of March end.

Guidance & targets

AUM

  • Total AUM Growth AUM · FY27 · High confidence ~25%
    We expect another year of approximately 25% growth in total AUM.

    — Jairam Sridharan

  • Total AUM AUM · FY28 · High confidence INR1,50,000 crores
    We thus stay very much on track for our stated goal of INR1,50,000 crores by FY28.

    — Jairam Sridharan

Profitability

  • Consolidated Profits Growth Profitability · FY27 · High confidence ~50%
    We expect consol profits to also grow at approximately 50%

    — Jairam Sridharan

  • Exit FY27 RoAUM Profitability · Exit FY27 · High confidence ~2.5%

    Previously 2.1% → ~2.5%

    and we expect to exit FY27 with a return on AUM of approximately 2.5% versus the 2.1% we reported in Q4 FY26.

    — Jairam Sridharan

Leverage

  • AUM to Equity Leverage Leverage · Medium confidence 4.5 to 5x
    We continue to progress towards our goal of 4.5 to 5x.

    — Jairam Sridharan

Cost of Funds

  • Cost of Borrowing Reduction from AA+ Rating Cost of Funds · over the course of the coming three years · High confidence 50-80 bps
    I expect the AA+ impact to be about 50 to 80 basis points over the course of the coming three years, because three years is the time of churn of our liability side book.

    — Jairam Sridharan

Operating Efficiency

  • Opex to Assets Ratio Operating Efficiency · next year · High confidence continue to fall
    our opex to assets will continue to fall. And let me restate something I've said I think in a previous call, that if it comes to choosing between a declining opex to assets ratio and putting up new branches, in this year our bias will still be towards the opex to assets curve. We want the opex to assets curve to come down for one more year.

    — Jairam Sridharan

Branch Network

  • Gold Loan Branches Branch Network · FY27 · High confidence ~200
    We expect to open 180 more gold loan branches in FY27 to take our gold loan branch count to approximately 200.

    — Jairam Sridharan

Portfolio Mix

  • Unsecured AUM Share Portfolio Mix · Medium confidence 400-500 bps larger
    we would like unsecured to be about 400 basis points larger, 400 to 500 basis points larger in our mix compared to where we are right now

    — Jairam Sridharan

Taxation

  • Effective Tax Rate Taxation · foreseeable future · High confidence very low
    And hence for the next INR16,000 odd crores of PBT, from a modelling perspective, you can keep an effective tax rate in your model at a very low number, you know, unless something dramatically changes from here.

    — Jairam Sridharan

What to watch in Q1 FY27

Geopolitical impact on asset quality (bounce rates)

Next quarter (Q1 FY27)
Current Bounce rates in April same as March.
Target Continued stability in bounce rates; no visible impact of conflict on retail risk metrics.

Why it matters

Geopolitical events are a key macro risk, and management indicated Q2 FY27 as a potential inflection point for impact. Monitoring bounce rates will be an early indicator.

Overall, while geopolitical risks remain a key monitorable, India's macroeconomic stability, policy responsiveness, and domestic demand strength continues to support the growth outlook... We remain, however, watchful and ready to act as necessary.

Risks & concerns

  • Geopolitical Disruptions

    medium

    Volatile global macroeconomic environment, rising crude oil prices, and concerns about refined product availability due to Gulf disruptions, with potential impact on India's economy and financial services sector, though currently contained.

    Management acknowledged

  • Asset Quality in Specific Segments

    medium

    Elevated risk metrics in the semi-secured (used cars) business for three quarters, though a steep fall in Q4. Smaller ticket mortgages with MSME customers were flagged as potentially problematic.

    Management acknowledged

  • Volatility in Digital Lending

    low

    Digital loans are faster to scale but tend to be more volatile, with management having cut volumes by over 60% during peak risk in FY25.

    Management acknowledged

Q&A highlights

6 direct
Consol NIM vs Growth NIM & Legacy Book Trajectory Direct
Consol NIM and Growth NIM will become effectively the same, hopefully it was the latter half of this coming year as the Legacy book becomes smaller and smaller. And Growth NIM of course today is about 7%.

Clarifies the convergence of NIMs and the diminishing impact of the Legacy book, which is critical for future profitability.

Asked by Shreya Shivani (Nomura)

Levers for RoAUM Expansion to 2.5% Direct
Opex to assets, which will continue to get better, we believe there's another 50 basis points of play there. Cost of borrowing, which as I mentioned before has 50 to 80 basis points over a three-year period, right? So that should get better on a side interest rate cycle adjusted basis, right? And then there is this credit cost, which will probably go in the opposite direction, which you know if my earlier expectations are correct, it would probably kind of eat away some of the delta. But we believe there is enough play in the first two that we can hit 2.5% by Q4 of the coming year, even if there is some normalization of credit cost.

Provides a detailed breakdown of the drivers for achieving the ambitious RoAUM target, including specific basis point improvements from opex and cost of borrowing.

Asked by Harshit Toshniwal (Premji Invest)

Potential Recoveries from Legacy Book Write-offs Partial
I'll just say that there are a few hundred crores, I will not specify an exact amount, I'll just say that there are a few hundred crores of potential kind of write-backs that you can expect.

Indicates potential upside from past provisions, though management is cautious on quantification and timing, suggesting a conservative approach.

Asked by Harshit Toshniwal (Premji Invest)

Capital Adequacy and Runway for Growth Direct
We have like maybe four quarters of runway, three to four quarters of runway depending on how you look at it and the kind of profitability we have in the coming year. We have some runway left.

Reassures investors about the company's capital position and its ability to fund future growth without immediate dilution, despite ambitious growth targets.

Asked by Harshit Toshniwal (Premji Invest)

Impact of Geopolitical Conflict on Retail Risk Metrics Direct
If the war continues for a while longer, it is inconceivable that you will see no effect. This cannot happen, the effect will definitely be there. But I think that is Q2 event. I don't think there was no chance of seeing it in Q4, I don't think you'll see it in Q1 either.

Acknowledges the potential future impact of geopolitical events on asset quality, providing a timeline for when such effects might become visible, and highlighting bounce rates as a key monitorable.

Asked by Abhijit Tibrewal (Motilal Oswal)

Strategic Use of One-Time Gains for Balance Sheet Strengthening Direct
INR900 crores / INR590 crores are write-downs/mark-downs taken in Q4 to make good use of one-time gains (Piramal Imaging deferred consideration ~INR1,300 crores, Shriram Life sale ~INR300 crores). Used to strengthen balance sheet, pre-empt future losses, create conservatism.

Explains the rationale behind significant write-downs/impairments, indicating a proactive and conservative approach to balance sheet management using proceeds from asset sales.

Asked by Vikram Damani (Damani Family Office)

Branch Expansion Strategy and Opex to AUM Ratio Direct
We have come up with our branch plan in such a way that our opex to assets will continue to fall... Gold branches are 1/3 cost of urban. Rural branches 1/10 cost of urban. If opex curve starts to move up, will give up on branch growth.

Details the cost-effective nature of the new branch expansion (gold and rural) and management's commitment to maintaining a declining opex-to-AUM ratio, even if it means adjusting growth plans.

Asked by Vikram Damani (Damani Family Office)

3 min read 7 chapters

Detailed narrative

Strong AUM Growth and Retail Dominance

Piramal Finance achieved a total AUM of INR1,01,230 crores in FY26, marking a 25% year-on-year growth and crossing the INR1 lakh crore milestone. The retail business was a primary driver, growing 33% year-on-year to INR85,885 crores and now constituting 85% of the total AUM. This rapid scale-up, from INR20,000 crores to INR85,000 crores in four years, has been achieved while lowering opex ratios and maintaining tight risk control.

Robust Profitability and Asset Quality Improvement

The company reported a consolidated net profit of INR1,506 crores for FY26, a 3x increase year-on-year, surpassing its target of INR1,300-1,500 crores. The Growth business RoAUM improved to 2.1% in Q4 FY26 from 1.7% in Q4 FY25. Asset quality remained strong, with retail 90+ delinquencies down 20 basis points quarter-on-quarter to 0.6% and Growth business credit cost at 1.5%. The Wholesale 2.0 book maintained zero NPAs.

Expanding Margins and Optimized Cost of Funds

Consolidated Net Interest Margin (NIM) expanded by 20 basis points quarter-on-quarter to 6.5%, with the Growth book NIM at 7%. The cost of borrowing declined by 11 basis points quarter-on-quarter to 8.84%. Management expects the recent AA+ credit rating upgrade to further reduce the cost of borrowing by 50-80 basis points over the next three years as existing liabilities are churned, significantly contributing to future NIM expansion.

Strategic Balance Sheet Strengthening and Capital Position

Piramal Finance proactively utilized one-time gains from the sale of Piramal Imaging ($148 million) and Shriram Life Insurance (INR600 crores) to strengthen its balance sheet. This included taking write-downs and impairments of approximately INR900 crores and INR590 crores respectively, to pre-empt future losses and build conservatism. The company maintains a strong capital adequacy ratio of 19.8% as of March 2026, with a comfortable runway of 3-4 quarters for growth without immediate capital raising.

Operational Efficiency and AI Adoption

Operational productivity has doubled in the last two years, with AUM doubling while staff headcount remained flat, showcasing significant efficiency gains. Retail opex to AUM further decreased by 21 basis points quarter-on-quarter to 3.6% per annum. The company is also aggressively adopting AI, with total token volume reaching 178 billion in Q4, indicating high levels of AI integration across sales, underwriting, collections, and operations.

Legacy Book Nearing Resolution

The Legacy book was reduced by 59% year-on-year to INR2,807 crores, now representing less than 3% of the total AUM. Management expects this book to become "irrelevant" by the latter half of FY27, signaling the near completion of its run-down and a cleaner balance sheet going forward. Potential write-backs of "a few hundred crores" from this book are also anticipated.

FY27 Outlook and Growth Drivers

For FY27, Piramal Finance targets approximately 25% growth in total AUM and around 50% growth in consolidated profits, aiming for an exit FY27 RoAUM of 2.5%. Key growth drivers include continued expansion in retail (especially unsecured and gold loans), leveraging the AA+ rating for lower cost of funds, and further improvements in operational efficiency (opex to assets). The company plans to open 180 more gold loan branches in FY27, bringing the total to around 200.

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