PELNSEJuly 29, 2025

Piramal Enterprises Limited

11,214words
93turns
11analyst exchanges
7executives
Management on call
Ajay Piramal
CHAIRMAN – PIRAMAL ENTERPRISES LIMITED
Anand Piramal
EXECUTIVE DIRECTOR – PIRAMAL FINANCE
Rupen Jhaveri
GROUP PRESIDENT – PIRAMAL ENTERPRISES LIMITED
Jairam Sridharan
CEO (RETAIL LENDING) & MD (PIRAMAL FINANCE)
Yesh Nadkarni
CEO (WHOLESALE LENDING)
Upma Goel
CHIEF FINANCIAL OFFICER
Ravi Singh
HEAD (INVESTOR RELATIONS AND STRATEGY)
Key numbers — 40 extracted
22%
good start of the year with balanced performance on all key parameters. Consolidated AUM grew by 22% to ~INR85,700 crores. This compares with a growth of 17% year-on-year in quarter 4 of FY '25 and
INR85,700 crore
art of the year with balanced performance on all key parameters. Consolidated AUM grew by 22% to ~INR85,700 crores. This compares with a growth of 17% year-on-year in quarter 4 of FY '25 and 10% year-on-year in
17%
key parameters. Consolidated AUM grew by 22% to ~INR85,700 crores. This compares with a growth of 17% year-on-year in quarter 4 of FY '25 and 10% year-on-year in the quarter 1 of FY '25. Retail AUM
10%
to ~INR85,700 crores. This compares with a growth of 17% year-on-year in quarter 4 of FY '25 and 10% year-on-year in the quarter 1 of FY '25. Retail AUM grew by 37% year-on-year and forms 80% of our
37%
n-year in quarter 4 of FY '25 and 10% year-on-year in the quarter 1 of FY '25. Retail AUM grew by 37% year-on-year and forms 80% of our total AUM. Our Growth business, comprising of retail and wholes
80%
25 and 10% year-on-year in the quarter 1 of FY '25. Retail AUM grew by 37% year-on-year and forms 80% of our total AUM. Our Growth business, comprising of retail and wholesale 2.0, now stands at 93%
93%
80% of our total AUM. Our Growth business, comprising of retail and wholesale 2.0, now stands at 93% of our total AUM. With reduced drag of the Legacy business, our consolidated PBT is INR301 crores
INR301 crore
stands at 93% of our total AUM. With reduced drag of the Legacy business, our consolidated PBT is INR301 crores, out of which Growth business, PBT is INR295 crores. Growth business PBT thus fully translated i
INR295 crore
the Legacy business, our consolidated PBT is INR301 crores, out of which Growth business, PBT is INR295 crores. Growth business PBT thus fully translated into our consolidated PBT. Benefiting from the same d
10 basis point
d into our consolidated PBT. Benefiting from the same dynamics, the consolidated NIM increased by 10 basis pointsQ-on-Q to 5.9%. The overall risk performance in the retail portfolio improved sequentially. It is
5.9%
BT. Benefiting from the same dynamics, the consolidated NIM increased by 10 basis pointsQ-on-Q to 5.9%. The overall risk performance in the retail portfolio improved sequentially. It is now at a com
1.4%
olesale 2.0 portfolio maintained 0 delinquencies. The credit cost for Growth business declined to 1.4% versus 1.8% in the last quarter of FY '25. Growth business opex to AUM continues to moderate. I
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Guidance — 20 items
Ajay Piramal
opening
“We expect to receive the payment subsequently in the last quarter of this current financial year.”
Ajay Piramal
opening
“Our earlier guidance related to this matter remains unchanged.”
Ajay Piramal
opening
“With Q1 FY '26 numbers, we are on track to meet all these targets.”
Jairam Sridharan
opening
“We do expect usually a little bit of seasonal weakness in the first quarter.”
Jairam Sridharan
opening
“We aim to continue the strength in line with our medium-term guidance of 3.5% to 4%.”
Jairam Sridharan
opening
“So we are not changing anything from a guidance perspective that we have shared before.”
Upma Goel
opening
“Since completion of PEL-PFL merger, we expect reversal of approximately 245 basis points from this reduction in the capital adequacy.”
Jairam Sridharan
qa
“The second part of your question, which is where does this book go as we look at next year.”
Jairam Sridharan
qa
“So at 1.5%, we have guided that in the medium term, that needs to get to 3%, right, or close to 3%.”
Jairam Sridharan
qa
“But next year, as the Legacy book continues to fall even further and the Growth book moves upward from 1.5% to, let's say, somewhere in the 2 handle, let's say, mid-2s towards the end of next year, that's kind of what the entire books ROA will also end up being.”
Risks & concerns — 15 flagged
With reduced drag of the Legacy business, our consolidated PBT is INR301 crores, out of which Growth business, PBT is INR295 crores.
— Ajay Piramal
The overall risk performance in the retail portfolio improved sequentially.
— Ajay Piramal
So those are the 3 reasons we believe our AUM growth continues to be robust in an otherwise weak market.
— Jairam Sridharan
Moving on to the credit risk performance.
— Jairam Sridharan
Key risk metrics such as credit costs, slippages, delinquencies broadly improved on a sequential basis.
— Jairam Sridharan
Risk in this quarter was seen at levels comparable to the second quarter of last year.
— Jairam Sridharan
Secured lending products basically had a very stable quarter on most risk metrics.
— Jairam Sridharan
Salaried businesses in unsecured saw a very strong Q1, reduction in all risk metrics.
— Jairam Sridharan
There were 2 pockets of the portfolio that did show risk deterioration in the quarter.
— Jairam Sridharan
If you see our risk chart, the long-term trajectory that we show, you will see fairly flat behavior of delinquencies in MSME unsecured.
— Jairam Sridharan
In this segment, we track around 30 industry sectors from a risk standpoint.
— Jairam Sridharan
We have seen fresh origination credit risk deteriorate in 23 of the 30 sectors.
— Jairam Sridharan
However, the overall improvement in risk was clear.
— Jairam Sridharan
It was also aided by a favorable impact of an ECL rebalancing effort that happened between Q4 and Q1.
— Jairam Sridharan
Slide 19 highlights some of the most successful use cases of Gen AI in our business, making significant headway across risk management, operating leverage, productivity and control, among other things.
— Jairam Sridharan
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Q&A — 11 exchanges
Q
I have two questions. The first one is on your provisioning coverage in retail. So if we see the data, I mean, Stage 1 provisioning cover has gone down from 1% to 0.8%, Stage 3 has gone down from 40% to 34%-odd. If we look at the kind of asset composition within retail in terms of secured, unsecured or just kind of cuts, it looks like not much has changed from Q4 March to June. So what explains, I mean, how is this ECL model kind of leading to this change in terms of provision coverage on retail? I mean in terms of retail assets have grown sequentially nearly 7- odd percent, where the absolute
Jairam Sridharan
Sure. Thanks, Avinash. So your reading is absolutely correct. See, the way this is all happening. I'm answering the first part of the question on provision coverage and retail. This is all a part of the ECL rebalancing thing that Upma spoke about, right? In the first quarter of every year, we do ECL rebalancing. And in our case, we = over the last 3 years, have consistently been reducing the weightage of external data and increasing the weightage of internal data. Our internal performance has continued to be a little bit better than what market average has been. And so as we are actually incre
Q
So firstly, with regards to unsecured MSME, you also highlighted that the open source business has shown some credit deterioration, while the cross-sell, MSME unsecured still continues to do well. What I'm trying to understand, sir, right now, what we've been hearing, at least in the last maybe 1- 2 months, lot of rationing of credit has started happening in MSME unsecured. And I'm talking more particularly about no tickets, smaller ticket MSME unsecured loans. More and more lenders want to do bigger ticket MSME. So to that end, don't you think that in an environment like this, where there are
Jairam Sridharan
Yes, absolutely. That's quite correct. See and right now, MSME in our business you have to look at things every quarter, every month, figure out which business or which segment is actually going through some challenges. And wherever you see some challenges, you have to put the brakes on, where you see opportunities, you've got to accelerate. So this business is kind of always optimizing sort of business. You can't have a one-off strategy and just fill it, shut it, forget it. You can never do that in this business. Right now, MSME unsecured is the area. If you look at our charts on Slide 14, yo
Q
My first question is actually just a clarification. Your AIF recovery for 1Q '25 was INR103.7 crores, which you have regrouped in the other operating income. So is it fair to believe that the INR82 crores of other operating income that you've shown in 1Q '26, that's the entire AIF recovery or there some bit of other part in it? So what is the AIF recovery number? That will be my first question. My second question is on the employee expenses. For the quarter, these expenses, particularly the employee portion of it, seems a little elevated. Can you help us understand what happened? What measures
Jairam Sridharan
Yes. Okay. So there are three parts to your question. Your first question, which is on AIF recovery. AIF recoveries in the first quarter are 0. So there is nothing in the P&L that has come from AIF recoveries. You are seeing an element in the P&L that is coming from recovery from old written off accounts. So in the same wholesale book, not in the AIF book, but in the loan part of the book, there were some assets which we had taken 100% provision on in the past and which we had written off as well, prudentially written-off. We did see some recoveries coming from there. Those are the items that
Q
Just two questions. One was on the asset quality side. When I look at your presentation, it looks like you seem to be doing fairly well on collections in most of the segments, let's say, other than used car loans. I mean I was curious, you had a slightly cautious commentary on MSMEs. So I was curious whether you see this trend for the industry? Or is it something that you're seeing in your portfolio?
Jairam Sridharan
In our data early, Nischint, if you see business loans, you see that little blue line there, you can see it's fairly stable. Nothing much has happened even though it used to be at lower levels at the beginning of last year. It has increased, but you see that the blue line is relatively stable. However, it hides one important fact, which is that if I deaverage that blue line into 2 parts, one, which is about new open market origination and the other, which is cross-sell. What I'm finding is that the cross-sell part is actually doing really well, and the new open market origination stuff is actu
Q
Jairam, just wanted to touch up on Slide number 22, instead of Slide number 21, okay? So here again, when you look at it in terms of the vintage risk, okay, that seems to be building up in salaried PL as well as in digital loans, if I'm reading it right. So how should we look at it? You have clearly called out with respect to used cars and business loans. But again, like say salaried PL and digital and I think disbursements in both these segments are growing. So how should we read that, yes?
Jairam Sridharan
Yes. No, it's a good call out, Kunal, it's a good catch. This is a 90 plus in 12, month metric that we are showing. We also got a bunch of other metrics, 30 plus 6, in particular, that is actually doing better. So I'm feeling okay. But yes, if this trend continued for 2 more quarters or even 1 more quarter, I would have to change commentary on this. Okay. So that would be, but are we changing the stance on disbursements in these 2 segments because that's not clearly reflecting. Right now, you should assume that in the business loans and UCL, a little bit of break on it. In salaried PL, acceler
Q
Sir, I have just one question, just figuring out whether in the retail book right now our yields are close to 14%, and our cost of funds stands at around 9% and we have 4% of opex to AUM, right? So a differential, a spread of 5% on which we are doing some opex sort of 4%. And even after this, your credit cost comes to around maybe, let's say, on an optimal basis, let's say, it comes around 50 bps. So largely, the retail ROAs would seem to be more of a flattish, right, or more of like muted. So I just want to know, I mean, in next 2 years or maybe even more, how should we see the trajectory and
Jairam Sridharan
Okay. See, the math that you did is a math on margin. Sorry, on spreads, not on margins. So just go to the margin math. Today, we are at about a little over 1%, 1.1%, 1.2%. ROA, we showed that Growth book ROA is about 1.4%, 1.5% during the quarter. And 86% of the Growth book is retail. So you cannot be like flat or losing money in retail and still make 1.5% in Growth book, right? So in our retail, let's call it ~1.25% ROA is being made today. And that will continue to move upwards based on 2 or 3 parameters, number one, opex, where there's about a 50 basis point play between where we are and w
Q
So the first question is around the FLDG that you just mentioned. The sizable listed Fintech mentioned that we are going off-FLDG with their lending partners, while we are seeing the opposite that we are doing more of FLDG with our Fintech partners. What is the divergence here between these 2 stances? Second, is there another large player of ours mentioned about stress in MSME, especially if it's an unsecured business loan. So what are we seeing in the unsecured part of the business loans, especially ticket sizes less than 10 lakhs? And when do we see them resolving?
Jairam Sridharan
Okay. On your first part of your question, see different companies will have different strategies. I can't comment on what this other competitor said. Our belief is that Fintech originated business continues to be our risk profile and volatility that a listed large regulated entity like us wouldn't want to keep a large part of that on our balance sheet. I would want to protect that risk. And so I'm not that keen on actually doing a lot of non-FLDG business. Others might have a different viewpoint, and that's fine. But our strategy is a more FLDG-driven strategy and it's not like we don't do no
Q
The question isbasically a credit rating, when is it up for the next review? And also, if any specific leverage number guidance, given it may help improve valuation.
Jairam Sridharan
Yes. So Jigar, we do a conversation with credit rating agencies on a very regular basis. We have started to have a conversation right after this quarter's results as well. So I'll be speaking with them next week. I don't have much more to say on that. Let's see what they think. In terms of leverage, what we have said historically and I'll repeat, is that we think right level of leverage or an appropriate level of leverage beyond which we will probably not be comfortable is 4:1 debt to equity. We are currently very far away from there. So it's not something that's a binding constraint right now
Q
Congratulations on good set of numbers. I just wanted to understand 2 things, broader aspect. Basically, if you can dwell more upon this WS2.0 book, how we are managing the risk? Till date, I think we have been doing quite excellent with 0 delinquency. But getting into intricacy as things on the IT side is slightly getting bad in terms of the hiring and all that, do you see risk because 80% of your exposure is into all these IT hubs. So just wanted to understand things going forward for that. And secondly, if you can touch upon this pause on the branch expansion strategy. So what is the plan t
Jairam Sridharan
Yes. My colleague, Yesh, will first take the first part, and I'll jump into the second one in a moment. Yes. So on your question, look, our intention is to actually build a very highly diversified and granular book on wholesale side, comprising both our real estate lending piece, which is about 70%, 75% of the portfolio, but also diversifying by way of getting granular exposure to a number of industries in our corporate mid-market lending strategy. So, what we are looking at is wholesale portfolio. That is very different than what it was in our previous version 1.0. The 2.0version of thebusine
Q
Jairam, I just wanted to understand. You spoke about micro LAP just now. Earlier in the call, you also alluded to the fact that less than 10 lakh ticket size is not doing well. Less than 5 lakh ticket size is even worsened. So the micro LAP product that we are trying to build, right, how you said that you are looking at it, which ticket sizes, which geographies kind of looking at, because why I ask is, I mean, in the last 1 year, there has been so much euphoria around this micro LAP product, right? Everyone wants to be do micro LAP. And given how small ticket LAP has behaved right? I'm just tr
Jairam Sridharan
No, it's a good question, Abhijit. See our average ticket size is 9 lakh in micro LAP. And yes, if you just look at the last 2 quarters of data, you'll be worried about it. And you will think that this is not really a business that we should be looking at right now. But as we have mentioned in the past, businesses get built with the long term in mind, we are building this business because we believe it will be a really good thing 20 years from now. We can't get caught up in where we are in the cycle right now. And we will not be overly optimistic about the business and like do thousands of cro
Q
Thank you, everybody. It's been a slightly longer call than usual, I hope that's a good thing. Thanks for participating actively in this call, and have a very good evening.
Management
Speaking time
Jairam Sridharan
38
Kunal Shah
14
Moderator
13
Abhijit Tibrewal
8
Shreya Shivani
4
Nischint Chawathe
3
Yesh Nadkarni
2
Avinash Singh
2
Mayank Mistry
2
Shubhranshu Mishra
2
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Opening remarks
Ajay Piramal
Good day, and thank you for joining us today on this call. With the first quarter of the current year, we've had a good start of the year with balanced performance on all key parameters. Consolidated AUM grew by 22% to ~INR85,700 crores. This compares with a growth of 17% year-on-year in quarter 4 of FY '25 and 10% year-on-year in the quarter 1 of FY '25. Retail AUM grew by 37% year-on-year and forms 80% of our total AUM. Our Growth business, comprising of retail and wholesale 2.0, now stands at 93% of our total AUM. With reduced drag of the Legacy business, our consolidated PBT is INR301 crores, out of which Growth business, PBT is INR295 crores. Growth business PBT thus fully translated into our consolidated PBT. Benefiting from the same dynamics, the consolidated NIM increased by 10 basis pointsQ-on-Q to 5.9%. The overall risk performance in the retail portfolio improved sequentially. It is now at a comparable level to that seen in the second quarter of FY '25. Wholesale 2.0 portfol
Jairam Sridharan
Thank you, sir. Ladies and gentlemen, I'm going to take you through the story and what we have seen in the first quarter in retail lending. We have had a very strong start of the year for our business. We do expect usually a little bit of seasonal weakness in the first quarter. However, we were able to sustain AUM growth at 37% year-on-year for June ending quarter versus the 35% for the quarter ended March '25. From a disbursement standpoint, in the first quarter of this year, disbursements were at INR8,718 crores, up 28% year-on-year. In our flagship mortgage business, which comprises the affordable housing loans and loan against property, growth was 38% year-on-year to INR47,101 crores. Mortgages now account for 55% of the total AUM of the company and 68% of retail AUM. Now the market itself, as we all know, is growing sub 10%, I want to address the question of what are the key drivers behind our strong AUM growth at scale in such a market. We believe there are 3 reasons why our AUM
Yesh Nadkarni
Thanks a lot, Jairam, and good evening, everyone. On the wholesale lending side, in the first quarter of FY '26, our AUM for the new business, our 2.0 version of our business, grew by 14% quarter-on-quarter to INR10,425 crores. We disbursed INR2,302 crores during the quarter across real estate and CMML segments. This was an increase of 35% quarter-on-quarter in disbursements. Origination per loan was INR60 crores during the quarter, while disbursed amount per loan was about INR30 crores. The portfolio has an average ticket size now of INR74 crores, which is in line with the previous few quarters, and the effective interest rate stands at 14.5%, featuring a well-balanced asset duration and diversification. We continue to see strong tailwinds across real estate and CMML segments and will continue, therefore, to grow this book in a calibrated manner and a granular manner through FY '26. Repayments were almost 43% of disbursements during quarter 1, and they continue to remain at significan
Upma Goel
Thank you, Yesh. Good evening to everyone. Moving to our financial performance. In Q1 FY '26, we reported consolidated net profit of INR276 crores, growth of 52% Y-o-Y over Q1 FY '25 net profit of INR181 crores. Pro forma PBT for Growth business stood at INR295 crores, growth of 44% Y-o-Y over PBT of INR204 crores in Q1 FY '25. With reducing drag of Legacy business, Consol NIM increased by 10 basis points quarter-on- quarter to 5.9%. Growth AUM grew by 38% Y-o-Y to INR79,430 crores. Operating profit grew by 51% Y-o-Y to INR565 crores. In Q1 FY '26, the reported Growth business credit cost was at 1.4% versus 1.8% in Q4 FY '25. Last quarter Q4 FY '25, credit costs included a negative impact of about INR45 crores due to ECL rebalancing mainly in the microfinance business. In quarter 1 FY '26, ECL rebalancing for the overall portfolio had a positive impact of about INR105 crores. Our total GNPA and NNPA ratio stands at 2.8% and 2%, respectively. Our network stands at INR27,174 crores. Capi
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