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    Piramal Pharma Q2 FY26 earnings call

    PPLPHARMAGood
    Healthcare·17 Oct 2025
    Management Summary

    Piramal Finance delivered a strong Q2 FY26, marked by its first earnings call following the merger of Piramal Enterprises with Piramal Finance. The company is successfully pivoting toward a retail-heavy 'Growth' book while aggressively winding down its legacy real estate exposure. With robust disbursement growth, improving operational leverage, and a clear roadmap for AI integration, management is signaling high confidence in achieving a 3% steady-state ROAUM.

    Highlights

    8

    • Consolidated Profit After Tax (PAT) reached ₹327 crores, a 101% YoY increase.

    • Total Growth AUM stood at ₹86,000 crores, with Growth AUM up 37% YoY and Consol AUM up 22% YoY.

    • Retail disbursements hit a lifetime high of ₹10,954 crores, growing 36% YoY.

    • Cost of borrowing reduced by 19 bps QoQ to 8.9%, falling below 9% for the first time in five quarters.

    • ROAUM improved to 1.7% in Q2 FY26, compared to 1.5% in Q1 FY26 and 1.4% in FY25.

    • Legacy AUM reduced to ₹5,448 crores, now representing less than 6% of the total AUM.

    • Retail OPEX-to-AUM ratio improved significantly to 3.9% from 6.5% in Q4 FY23.

    • Management set an ambitious target to double AUM to over ₹1.5 lakh crores by FY28.

    Concerns

    1

    • Micro-LAP Stress

    What Changed1

    vs Q3 FY26

    Tone shiftNeutral → Good

    Key financials

    Single quarter

    06 metrics
    1. 01Consolidated PAT₹327 Cr+101%YoY
    2. 02Total Growth AUM₹86,000 Cr+37%YoY
    3. 03Cost of Borrowing8.9%-2.1%QoQ
    4. 04ROAUM1.7%+13.3%QoQ
    5. 05GNPA Ratio2.6%

    Segment breakdown

    AUM GrowthAUM
    Retail Lending36%—
    Wholesale 2.043%₹11,295 Cr
    Legacy Book—₹5,448 Cr
    Heatmap· 2 shared metrics

    Guidance & targets

    5
    CategoryTargetPriority
    Volume
    Total AUM
    ₹1.5 lakh crores
    		High
    Profitability
    ROAUM
    >3%
    		Medium
    Profitability
    Full Year Consol PAT
    ₹1,300 to ₹1,500 crores
    		High
    Margin
    Retail OPEX-to-AUM
    3.25% to 3.75%
    		High
    Other
    Legacy AUM
    <₹3,500 crores
    		High

    Risks & concerns

    4
    RiskSeverity

    Micro-LAP Stress

    Management expects the Micro-LAP segment to face continued stress for at least a few more quarters. — Management acknowledged

    high

    LAP Delinquency Normalization

    LAP delinquencies rose slightly; management views this as a reversion to mean from abnormally low historical levels. — Both acknowledged

    medium

    Unsecured Business Loans & Used Cars

    Identified as pockets needing closer monitoring, though currently stable quarter-on-quarter. — Management acknowledged

    medium

    Areas of Evasion(1)

    • Specific details on the Shriram investment monetization were avoided due to confidentiality.

    Q&A highlights

    3

    “No, we are not doing any structured transactions. These are pure operating loans... this level of business is available at 14%. So, it is not a problem. You do not have to chase structured transactions.”

    Clarifies that the high yields in Wholesale 2.0 are not due to risky structuring but rather a specific market niche for mid-market operating loans.

    asked by Prithviraj Patil, Investec

    1 min read5 chapters

    Detailed Narrative

    01

    Strategic Merger and Leadership Transition

    The quarter marked the formal merger of Piramal Enterprises with Piramal Finance, with Anand Piramal taking over as Executive Chairman. This transition signals a shift from a legacy real estate focus to a diversified, retail-led NBFC. The company is now operating under a 'Growth, Profitability, Predictability' framework, aiming for a sustainable 3% ROAUM.

    02

    Retail Lending Momentum and Mortgage Dominance

    Retail disbursements reached a record ₹10,954 crores, up 36% YoY. The mortgage business, comprising affordable housing and LAP, crossed the ₹50,000 crore AUM milestone and now accounts for 68% of the retail book. Management plans to increase the share of unsecured lending from 17% to approximately 25-30% over the medium term⏳.

    03

    Wholesale 2.0 and Legacy Book Liquidation

    Wholesale 2.0 AUM grew 43% YoY to ₹11,295 crores, focusing on mid-market companies with an average ticket size of ₹71 crores and an effective interest rate of 14.5%. Simultaneously, the legacy real estate book was reduced by ₹1,472 crores in H1, now standing at less than 6% of total AUM, with a target to reach below ₹3,500 crores by year-end.

    04

    Operational Efficiency and AI Integration

    The company is aggressively reducing its retail OPEX-to-AUM ratio, which fell to 3.9% this quarter, leading to a downward revision of the target to 3.25%-3.75%. This efficiency is being driven by 'Piramal.ai', an enterprise AI strategy with 45 scaled use cases currently live, aimed at improving underwriting and productivity.

    05

    Borrowing Costs and Capital Position

    Cost of borrowing dipped 19 bps QoQ to 8.9%, aided by a diversified mix including increased mutual fund participation (13% vs 6% in March). With a net worth of ₹27,447 crores and capital adequacy at 20.7%, management believes they can fund their growth targets organically through FY27 without needing a fresh capital raise.

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