Piramal Finance: FY27 Growth Outlook, Stake Sales & Expansion Plans

Piramal Finance reported a consolidated net profit of Rs 502.0 crore for the quarter ended March 31, 2026, a 390% year-on-year increase from Rs 102.0 crore. The surge in profitability was driven by expansion in the company’s growth businesses, a reduction in legacy assets, and improved operating efficiency, according to a company statement.

Net interest income rose 41% year-on-year to Rs 1,362.0 crore in the fourth quarter of fiscal year 2026. Interest income increased 28% to Rs 3,038.0 crore, supported by assets under management (AUM) exceeding Rs 1,01,230.0 crore, a 25% year-on-year increase. Growth AUM accounted for 97% of the total portfolio, rising 33% during the period.

The company is also planning stake sales in non-core businesses as part of its strategy to optimize its portfolio and focus on key growth areas. In the fourth quarter of fiscal year 2026, Piramal Finance sold its stake in Shriram Life Insurance for Rs 600 crore.

Profitability and AUM Growth

The substantial increase in net profit reflects the company’s successful transition towards a more focused and efficient business model. The growth in AUM, particularly within the retail segment, demonstrates the effectiveness of the company’s strategy to expand its reach and cater to a broader customer base.

Interest expense increased 18% to Rs 1,676.0 crore, while the cost of borrowings declined to 8.8% from 9.1% a year earlier. Net interest margin expanded by 14 basis points to 6.5%. Total income, comprising net interest income and non-interest income, rose 16% to Rs 1,556.0 crore.

Asset Quality and Provisions

Piramal Finance’s asset quality showed improvement as the company shifted its focus towards retail lending, which now constitutes 85% of its total AUM. The gross stage 3 ratio decreased to 2.3% from 2.8% a year earlier, while the net stage 3 ratio stood at 1.6%.

Loan loss provisions increased to Rs 1,787.0 crore from Rs 531.0 crore, reflecting higher provisioning on legacy assets. This proactive approach to managing potential risks underscores the company’s commitment to maintaining a healthy balance sheet.

Exceptional Gains and Full-Year Performance

Profitability was further bolstered by exceptional gains of Rs 1,590.0 crore, including Rs 1,326.0 crore from the sale of Piramal Imaging and Rs 263.0 crore from the stake sale in Shriram Life Insurance. For the full year ended March 31, 2026, net profit rose 210% year-on-year to Rs 1,506.0 crore.

Future Outlook and Strategy

As of March 31, 2026, total AUM stood at Rs 1,01,230.0 crore, up 25%, with retail AUM rising 33% to Rs 85,885.0 crore. The capital adequacy ratio remained strong at 19.8%.

Piramal Finance is actively pursuing opportunities to raise up to Rs 30,000 crore in the current financial year to fund its continued growth initiatives. The company aims to expand its rural lending and branch network, further solidifying its position in the financial services sector.

The company’s focus on retail lending, coupled with its strategic stake sales and efficient operations, positions it for sustained growth and profitability in the coming years. Operating profit increased 25% to Rs 694.0 crore, supported by lower operating costs, with the retail operating expense-to-AUM ratio declining by 74 basis points to 3.6%.

Non-interest income declined 49% year-on-year to Rs 194.0 crore in the quarter, weighed by a 39% fall in fee and commission income and a 57% decline in other income.