Piramal Finance: A Strong Q3 FY26 Driven by Growth, Profitability, and AI Integration

Piramal Finance Limited, a prominent retail-led upper layer NBFC, has delivered a robust performance in the third quarter of FY26, ending December 31, 2025. The company's consolidated results highlight significant advancements across key financial and operational parameters, underscoring its focus on balanced growth, enhanced profitability, and predictable risk management. The nine-month period of FY26 has been particularly strong, with the company's consolidated Profit After Tax (PAT) soaring to over INR 1,000 crore, a remarkable increase from INR 383 crore in the corresponding period of FY25. This impressive growth was achieved without any major one-off gains, driven by expanding consolidated margins, stable risk profiles, and improving operating leverage.

Total Assets Under Management (AUM) witnessed a substantial 23% year-on-year growth, reaching INR 96,690 crore. The growth business AUM, comprising retail and wholesale 2.0 segments, expanded by 34% year-on-year to INR 91,460 crore, now constituting 95% of the total AUM. Retail AUM alone grew 34% year-on-year to INR 79,413 crore, representing 82% of the total AUM. This retail growth was well-diversified across six product categories, each growing between 20% and 60% year-on-year. The mortgage business, including housing loans and LAP, grew 35% year-on-year to INR 53,958 crore, accounting for 68% of retail AUM and 56% of total AUM. Wholesale 2.0 AUM also saw a 35% year-on-year increase, reaching INR 12,047 crore, with both real estate and mid-market lending segments showing strong growth trends.

Strategic Milestones and Operational Excellence

Piramal Finance achieved several significant milestones during and immediately after the quarter. A crucial development was the upgrade of its long-term debt rating to AA+ by CRISIL in January 2026. This rating is expected to be pivotal in lowering the company's cost of borrowing by 50 to 80 basis points and providing access to new segments of the lending market, thereby enhancing AUM growth and RoAUM. Furthermore, the company secured an inaugural $350 million long-term DFI funding from IFC and ADB, diversifying its funding sources and validating its business model and governance.

Operational efficiency continued to improve, with the Retail opex-to-AUM ratio declining by 10 basis points quarter-on-quarter to 3.8% in Q3 FY26. This consistent reduction over the past three years is a testament to enhanced branch and employee productivity, significantly aided by the company's robust technology and AI integration. Piramal Finance's AI strategy is delivering value across five key dimensions, including underwriting, drive growth, improving customer experience, enhancing productivity, and building an AI-native company. Reinforcement learning models are optimizing collection channels, Speech-to-Text models are enriching collection dispositions, and AI collection bots are matching human performance, with 54% of the overall code now written by AI.

Asset quality remained stable, with the total Gross Non-Performing Assets (GNPA) flat at 2.6% and Net Non-Performing Assets (NNPA) at 1.9%. Growth business credit costs decreased by 10 basis points quarter-on-quarter to 1.6%. The unsecured portfolio showed steady improvement, with delinquencies reaching their lowest levels in the past five quarters. The home loan segment also maintained solid and low delinquencies. However, the LAP segment witnessed a 'gradual creep up in risk,' particularly in low-ticket and high-leverage subsegments, leading the company to exit the micro-LAP and small ticket LAP market due to poor performance.

Future Outlook and Management Confidence

Looking ahead, Piramal Finance is confident in meeting its near-term and medium-term growth and profitability targets. The company projects AUM to cross INR 1 lakh crore by the end of the current financial year and reach over INR 1.5 lakh crore by FY28. It aims for a RoAUM of over 3% and a leverage ratio (AUM to equity) of 4.5x to 5x. The company also expects a further 25 basis points reduction in its cost of borrowing in the coming months and plans to reduce the Retail opex-to-AUM ratio to between 3.25% and 3.75%.

To further de-risk the business, Piramal Finance remains focused on reducing its legacy wholesale business AUM to INR 3,000-3,500 crore by March 2026, from the current INR 5,230 crore. The company also announced the monetization of its stake in Shriram Life Insurance for INR 600 crore, expected to conclude in Q4, with further monetization of other investments anticipated in the coming quarters to strengthen the balance sheet. Despite some leadership churn in the retail business, with the CEO and COO moving on, internal succession plans are well in place, ensuring a smooth transition. Piramal Finance's strategic clarity, disciplined execution, and proactive risk management position it for sustained growth and value creation for its shareholders.