Piramal Finance derisks book, eyes ₹1.5 lakh cr AUM

A retail-led pivot is now the core strategy

Piramal Enterprises (NSE: PEL) has been repositioning its lending business around a retail-dominated book, after several years of running down legacy wholesale exposures. The company has set an FY28 target of ₹1.5 lakh crore in assets under management (AUM), signalling confidence that the transition phase is largely over. Recent disclosures and broker commentary point to a steadier earnings profile, supported by improving net interest margins (NIMs), operating leverage, and stable asset quality in the growth businesses.

The strategic emphasis has shifted from “repair mode” during FY22 to FY25 to “growth-and-optimise mode” for FY26, based on management commentary. In parallel, Piramal is preparing for a structural simplification through the merger of PEL and Piramal Finance Ltd (PFL), which is expected to be completed by September 2025. The merger is also expected to provide a tax shield of ₹14,500 crore in assessed carry-forward losses, which management said could make profit before tax (PBT) broadly equal to profit after tax (PAT) for several years.

Legacy wholesale run-down remains the key balance-sheet theme

The central change has been decisive de-risking of the loan book. One management commentary described a shift from a wholesale-dominated loan book of about 95% five years ago to about 83% retail now, with the legacy wholesale book cut by more than 90% to around ₹54,000 crore. Separately, a quarterly update cited in the same dataset reported Wholesale 1.0 AUM at ₹5,400 crore (₹54 billion), down about 55% year-on-year and 14% quarter-on-quarter.

Across disclosures, the direction is consistent: the legacy wholesale portfolio is being run down aggressively and is becoming a small portion of the balance sheet. Management reiterated an intent to reduce the legacy wholesale book to about ₹3,000 crore by end-FY26 in one update, while another note cited a March 2026 target range of ₹30,000 to ₹35,000 crore. The company has also indicated it would remain selective in wholesale lending, focusing on plain-vanilla operating loans targeting yields of around 14%, while avoiding structured, higher-risk transactions.

Retail growth is driving AUM expansion

The retail franchise is scaling faster than the consolidated book. Retail AUM has been cited as growing at about 35%, while consolidated AUM is expanding at about 25% in management commentary. As of Q3 FY26 (quarter ended December 31, 2025), Piramal Finance reported total AUM of ₹96,690 crore, up 23% year-on-year. Retail AUM stood at ₹79,413 crore, up 34% year-on-year, and represented 82% of total AUM.

Within retail, mortgages remain the largest category. Mortgage AUM was reported at ₹53,958 crore in Q3 FY26, accounting for 68% of retail AUM and 56% of total AUM. Disbursements for the quarter were reported at ₹10,498 crore, up 26% year-on-year. The company also outlined a medium-term plan to raise unsecured loans from around 18% of the mix to about 25%, while maintaining what it described as balanced product diversification.

Profitability indicators have improved, with volatility moderating

Piramal Finance reported PAT of ₹401 crore in Q3 FY26, compared with ₹39 crore in Q3 FY25. For 9M FY26, PAT was reported at ₹1,004 crore. NIM expanded by 51 basis points year-on-year to 6.3% in Q3 FY26, and growth business return on average assets under management (RoAUM) increased to 1.9% from 1.3% in Q3 FY25, supported by lower operating expenses relative to AUM.

Management and broker commentary also pointed to improved NIMs, sustained cost efficiencies, and stable asset quality as reasons the earnings volatility seen during the transition period is now “comfortably behind.” The dataset also includes FY26 guidance expectations of about 25% AUM growth and PAT of ₹1,300 to ₹1,500 crore, described as more than doubling from the then-current base.

Asset quality and funding metrics cited in updates

In Q3 FY26, Piramal Finance reported gross non-performing assets (GNPA) of 2.6% and net NPA (NNPA) of 1.9%, with asset quality described as stable. Overall retail 90+ days past due (DPD) remained steady at 0.8% in another disclosure. Growth business credit cost was reported at 1.6%, down 10 basis points quarter-on-quarter.

On funding and liquidity, disclosures in the dataset point to strong buffers across periods. One FY25 update cited cash and liquid assets of ₹9,070 crore, around 9% of total assets, with borrowing cost stable at about 9.12% and a fixed-to-floating mix of 54:46. In Q3 FY26, the company reported net worth of ₹27,872 crore and cash and liquid investments of ₹7,504 crore, around 7% of total assets.

Merger timeline and capital planning

The PEL and Piramal Finance merger is expected to complete by September 2025, and a separate timeline reference described it as a Q2 FY26 milestone. Management has also indicated the balance sheet is well capitalised, with no equity raise expected until at least the first half of FY27. Another update stated that internal accruals and capital releases from the legacy portfolio are expected to fund growth through FY27, and any capital raise decision would be evaluated thereafter.

The company has also discussed monetising insurance holdings. One note mentioned plans to monetise stakes in Shriram Life and Shriram General Insurance next year, while a later update stated that the stake in Shriram Life Insurance was monetised for ₹600 crore, with closure expected in Q4.

Key numbers at a glance

FY25 results and FY26 guidance points cited in disclosures

FY25 marked a return to profitability for Piramal Enterprises on a consolidated basis. The company reported consolidated net profit of ₹485 crore for FY25, compared with a net loss of ₹1,684 crore in FY24. A key item cited was a profit swing supported by ₹926 crore of legacy/AIF recoveries, which helped turn FY25 PAT positive despite higher micro-credit costs.

The dataset includes a guidance table indicating FY26 projections of about 25% AUM growth, growth AUM of about ₹96,000 crore, retail share of 80% to 85%, a legacy book of ₹3,000 to ₹3,500 crore, and consolidated PAT of ₹1,300 to ₹1,500 crore.

What the shift means for investors and the NBFC model

Motilal Oswal’s view cited in the dataset is that Piramal Finance has emerged as a large, fast-scaling NBFC with competitive positioning in semi-urban India, with multiple profitability levers now in play. The operational narrative in the disclosures is that a retail-led, more granular book should reduce concentration risk that historically came with large-ticket wholesale exposures.

At the same time, the company’s medium-term plan to raise unsecured loans from around 18% to about 25% underscores the need to balance growth with credit discipline. The dataset also notes that return ratios have been muted in the past, with ROE cited at around 2% in one FY25 note due to unsecured stress and excess capital, implying that the next phase of execution is about translating the cleaned-up book into stronger, more consistent returns.

Conclusion

Piramal’s latest disclosures highlight a clearer post-transition roadmap: scale retail, keep wholesale selective, and continue shrinking legacy exposures while targeting ₹1.5 lakh crore AUM by FY28. Near-term signposts include progress on the PEL-Piramal Finance merger expected by September 2025, the planned legacy book reduction by end-FY26 targets cited in updates, and the company’s stated approach to capital planning through FY27.