Summary
Piramal Finance Limited - Q3 FY26 Earnings Call Summary Friday, January 23, 2026, 4:00 PM
Event Participants
Executives 6 Anand Piramal (Executive Chairman), Jairam Sridharan (MD & CEO), Rupen Jhaveri (Group President), Ravi Singh (Head of Investor Relations), Vikash Singhla (CFO), Yesh Nadkarni (CEO, Wholesale Lending)
Analysts 6 Abhijit Tibrewal, Anusha Raheja, Avinash Singh, Harshit Toshniwal, Kushagra Goel, Prithviraj Patil, Vikram Damani
Financials & KPIs
| Metric | Reported | Commentary |
|---|---|---|
| Total AUM | ₹96,690 crores | +23% YoY; Growth book (Retail + Wholesale 2.0) grew 34% YoY and now represents 95% of total AUM. |
| Consolidated PAT | ₹401 crores | Significant increase from ₹39 crores YoY; 9M FY26 PAT crossed ₹1,000 crores without major one-offs. |
| Net Interest Margin (NIM) | 6.3% | +51 bps YoY; Expanding on a consolidated basis due to lower cost of borrowing and stable yields. |
| Retail AUM Yield | 13.2% | Broadly stable; Management expects some potential pressure in Q4 due to competitive pricing. |
| Cost of Borrowing | ~8.0% | -25 bps impact so far in rate-cut cycle; Management expects further 25 bps reduction soon. |
| Opex to AUM (Retail) | 3.8% | -10 bps QoQ; Continued downward trajectory despite ₹35 crore impact from new labor code. |
| GNPA | 2.6% | Stable; GNPA for Growth business remains healthy, while legacy wholesale book continues to wind down. |
| NNPA | 1.9% | Stable; Reflects consistent credit risk outcomes and formulaic provisioning. |
| Capital Adequacy (CRAR) | 20.3% | -40 bps QoQ; Leverage increased to 3.5x as the company steadily moves toward 4.5x-5.0x target. |
Geographic & Segment Commentary
Retail Lending: AUM grew 34% YoY to ₹78,813 crores, representing 82% of total AUM. Mortgages (Housing + LAP) grew 35% YoY to ₹53,958 crores, while unsecured segments showed steady delinquency improvements. Management noted a flattening of disbursements in Q3 (₹10,498 crores) due to internal process cyclicality but expects a strong Q4.
Wholesale 2.0: AUM stood at ₹12,047 crores, up 35% YoY with a focus on granular real estate (74%) and corporate mid-market lending (26%). Average ticket size remains small at ₹54 crores with a stable yield of 14.5%. High repayments (66% of disbursements) reflect strong portfolio performance and asset quality.
Legacy Wholesale: AUM reduced to ₹5,230 crores, now making up less than 5% of total AUM. Management is on track to reduce this book to ₹3,000–₹3,500 crores by March 2026. This segment continues to be a focus for monetization and risk offset.
Company-Specific & Strategic Commentary
Credit Rating Upgrade: CRISIL upgraded the long-term debt rating to AA+, which management expects will eventually lower borrowing costs by 50-80 bps as the debt stack churns. This rating also opens access to new lending markets and allows for higher leverage to boost ROE.
AI & Digitization: Advanced AI models were rolled out for collections, including reinforcement learning for channel allocation and speech-to-text for dispositions. AI collection bots now match human performance, enabling a scalable hybrid call center model.
Product Expansion: The company is restarting branch expansion in Q4 FY26 with 100 new outlets. This includes a strategic entry into Microfinance (55 branches) and Gold Loans (20 branches) to fill existing product white spaces.
Leadership Transition: Jagdeep Mallareddy (CEO, Retail) and Sunit Madan (COO) are departing. Imtiaz Ahmed (Chief Business Officer) and Vikas Arora (COO) will take over effective April 1, 2026, ensuring internal continuity.
Guidance & Outlook
| Metric | Guidance / Outlook | Commentary |
|---|---|---|
| Total AUM | >₹1,00,000 crores by FY26 end | Driven by 35% growth in the Growth book and stabilization of legacy assets. |
| Total AUM (Medium Term) | >₹1,50,000 crores by FY28 | Strategy involves scaling retail cross-sell and new product launches (Gold/MFI). |
| Return on AUM (ROAUM) | ~3.0% (Medium Term) | Progressing from current 1.9% via operating leverage and lower funding costs. |
| Cost-to-AUM (Retail) | 3.25% - 3.75% | Target to reach 75th percentile of peer efficiency through technology and scale. |
Risks & Constraints
| Risk | Context |
|---|---|
| Asset Quality (LAP/Used Car) | Low-ticket LAP (<₹10 lakh) is showing stress; management has exited this sub-segment. Used car loans saw an uptick in H1, though recent originations show stabilization. |
| Refinancing Cost | ₹15,000 crores of DHFL-era NCDs (at ~7.37%) begin coming due next year. Management expects to refinance these at similar rates via new NCD issuances, minimizing margin impact. |
| Competition | Aggressive pricing from banks and well-capitalized NBFCs may lead to yield compression as interest rates decline. |
Q&A Highlights
Yields and Digital Sourcing
- Question: Why are digital yields lower than salaried personal loans, and is the 17% yield sustainable? (Avinash Singh)
- Answer: Digital yields are reported net of partner costs and mostly utilize an FLDG construct with near-zero credit costs. Salaried PL at 17% is branch-originated; while competition is high, structural demand remains healthy. (Jairam Sridharan)
Monetization and Provisions
- Question: Will the Shriram Life Insurance stake sale result in a profit beat? (Kushagra Goel)
- Answer: The ₹600 crore monetization is expected in Q4. However, management intends to strengthen the balance sheet by offsetting potential legacy impairments rather than just flowing everything to the P&L. (Jairam Sridharan)
Management Changes
- Question: Does the departure of the Retail CEO and COO signal instability? (Harshit Toshniwal)
- Answer: No. The transition is to internal leaders (Imtiaz and Vikas) who have been with the system for 6 years. There is a 2.5-month overlap period to ensure zero dislocation. (Jairam Sridharan)
Cost of Funds and Ratings
- Question: Do you need a second AA+ rating to get the full pricing benefit? (Abhijit Tibrewal)
- Answer: Yes. Currently, CRISIL is at AA+ while ICRA/CARE are at AA. Management is in active discussions with other agencies following the CRISIL upgrade. (Jairam Sridharan)
Key Takeaway
Piramal Finance delivered a robust Q3 FY26, characterized by 23% YoY total AUM growth to ₹96,690 crores and a significant jump in 9-month PAT to over ₹1,000 crores. The strategic pivot toward a “Growth Book” (Retail + Wholesale 2.0) is nearing completion, with these segments now comprising 95% of the balance sheet. Efficiency gains are evident as Retail Opex-to-AUM improved to 3.8%, even as the company prepares to launch 100 new branches targeting Gold and Microfinance. A pivotal AA+ rating upgrade from CRISIL is expected to reduce future borrowing costs by 50-80 bps, supporting the medium-term target of 3% ROAUM. While small-ticket LAP remains a point of caution, the overall credit cost for the growth business improved to 1.6%. The company remains firmly on track to exceed its ₹1 lakh crore AUM target by year-end FY26.
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