Piramal Finance Q1 FY27: Strong AUM Growth, Higher Profit and Improving Operating Efficiency

Piramal Finance delivered a strong performance in Q1 FY27, with consolidated AUM rising 25% year-on-year to ₹1,06,940 crore. Retail AUM grew faster at 32% YoY to ₹91,249 crore, reflecting continued expansion across housing finance, loan against property, personal loans, business loans and other retail segments. Consolidated PAT increased 67% YoY to ₹461 crore, while growth-business PBT stood at ₹470 crore, up 59% YoY. The company said its growth AUM is now 98% of total AUM, indicating that the legacy book has become relatively small.

NIM and Profitability: Margins Continue to Improve

Profitability metrics also showed improvement during the quarter. NIM stood at 6.5%, up 47 basis points YoY and stable sequentially, while the cost of borrowings remained stable at 8.8%. The growth business reported RoAUM of 1.9% compared with 1.5% in Q1 FY26, indicating improving profitability as the loan book scales. The company is targeting a long-term RoAUM of more than 3%, suggesting that management sees further scope for profitability improvement through operating leverage, better funding costs and scale.

Operating Efficiency: Cost-to-Income Ratio Declines

Piramal Finance continued to focus strongly on operating leverage. Retail opex-to-AUM declined to 3.5% in Q1 FY27, a reduction of 66 basis points YoY and around 300 basis points over the last three years. The company-wide cost-to-income ratio also improved significantly to 52.5% from 65.6% in Q1 FY26. Management’s strategy is to continue improving branch productivity, increase product penetration within existing branches, and use technology and AI to reduce operating costs while supporting business growth.

Asset Quality: Risk Remains Under Control

Asset quality remained stable despite the rapid expansion of the retail franchise. Consolidated GNPA improved to 2.4% from 2.8% in Q1 FY26, while NNPA stood at 1.6%. Retail 90+ DPD remained at around 0.7%, which the company highlighted as stable over the past four years. Growth-business credit cost was also stable at 1.6%. In wholesale lending, Stage 2+3 assets remained below 0.2%, indicating continued focus on underwriting discipline and portfolio quality.

Retail Lending: Main Engine of Growth

Retail lending continues to be the principal growth driver for Piramal Finance. Retail AUM increased 32% YoY to ₹91,249 crore, while retail disbursements grew 44% YoY. The company has built a diversified retail portfolio spanning housing loans, LAP, used-car loans, salaried personal loans, unsecured business loans, rural micro loans and digital loans. Mortgages, comprising housing loans and LAP, stood at ₹61,199 crore, accounting for roughly 67% of retail AUM. The company reported an AUM yield of 13.6% and retail opex-to-AUM of 3.5%.

Housing Loans and LAP: Strong Mortgage Franchise

The mortgage business remains a core part of Piramal Finance’s retail strategy. Housing-loan AUM grew 15% YoY, while LAP AUM grew 29% YoY. Housing loans had an average ticket size of around ₹24 lakh and an average LTV of 60%, while LAP had an average ticket size of ₹30 lakh and an average LTV of 49%. The portfolio combines mass-affluent and affordable housing as well as different LAP customer segments, giving the company a diversified secured lending base.

Unsecured Lending: Strong Momentum Across Products

The company also reported strong growth in unsecured products. Salaried personal-loan AUM grew 49% YoY, unsecured business-loan AUM increased 19% YoY, while digital-loan AUM grew 67% YoY. Disbursement growth was particularly strong, with salaried personal loans, unsecured business loans and digital loans recording significant year-on-year increases. The presentation indicates that Piramal Finance is using its expanding customer franchise and cross-selling capabilities to grow these higher-yielding products while maintaining underwriting discipline.

Rural Strategy: Micro-Loans Emerging as a New Growth Area

Rural lending is becoming an important part of Piramal Finance’s diversification strategy. Micro-loan AUM increased 101% YoY to ₹1,547 crore, while micro-loan disbursements jumped 296% YoY. The rural network has expanded across Uttar Pradesh, Karnataka, Odisha and Tamil Nadu, supported by both company branches and business correspondent branches. The average ticket size is around ₹56,000, with a 24–30 month tenure and a reported disbursement yield of 20.8%. The company noted that 99% of rural loans originated are first-round loans, indicating that the business is still in an early expansion phase.

Gold Loans: New Business With Aggressive Expansion Plans

Piramal Finance has also started building a gold-loan business as part of its secured lending strategy. The company reported that its gold-loan operation disbursed ₹6 crore in its first full month of operation in June 2026. The business had completed Phase 1 with 67 branches and entered Phase 2, with management targeting 200 gold-loan branches by the end of FY27. The company is focusing primarily on retail customers and tier-2 and tier-3 markets, with an average ticket size of approximately ₹85,000 and a reported disbursement yield of 17.9%.

Branch Expansion: Focus on Productivity Rather Than Just Network Growth

Piramal Finance had a total network of 780 branches across 26 states as of June 2026, including urban, rural and gold-loan branches. Importantly, management is not relying solely on opening new branches; it is focusing on increasing product penetration within existing locations. The number of products offered through urban branches has expanded substantially, including housing loans, LAP, used-car loans, salaried personal loans and unsecured business loans. The company believes the increasing maturity of its branch network can result in further productivity improvement.

Customer Franchise and Cross-Selling: Large Opportunity

The company’s customer franchise increased 24% YoY to 6 million customers. Cross-selling is becoming an important growth lever, with approximately 25–30% of unsecured disbursements coming through cross-sell. Retail disbursements increased to ₹12,198 crore in Q1 FY27 from ₹8,600 crore a year earlier, while unsecured disbursements increased to ₹5,288 crore from ₹2,899 crore. This indicates that Piramal Finance is increasingly using its existing customer base to generate incremental lending rather than relying entirely on new customer acquisition.

Wholesale Lending: Growing but More Granular and Diversified

Wholesale lending AUM increased 27% YoY to ₹13,238 crore, with Q1 FY27 disbursements of ₹2,604 crore. The company has been building a more granular and diversified wholesale portfolio backed by assets and borrower cash flows. Since inception in Q2 FY22, Piramal Finance has disbursed ₹28,113 crore across 419 loans and received total repayments of ₹14,841 crore. During Q1 FY27, repayments stood at ₹1,932 crore, equivalent to 74% of disbursements, while prepayments were ₹1,030 crore. Management said portfolio performance has been in line with or ahead of underwriting expectations, as reflected in prepayments.

Wholesale Portfolio: Diversification Reduces Concentration Risk

The wholesale book is becoming more diversified across residential and commercial real estate and other corporate exposures. The company reported a wholesale AUM of ₹13,238 crore, with an average ticket size of ₹56 crore and average residual tenure of 2.7 years. The portfolio includes exposure to residential, commercial, NBFC-fintech, NBFC-MFI, MSME, steel, broking, renewable energy and other corporate segments. The presentation also highlights that the CMML portfolio’s borrower rating mix has been shifting towards higher-rated borrowers.

AI Strategy: Building an AI-Native Lending Platform

One of the most important strategic themes in the presentation is the company’s effort to become an AI-native financial services company. Piramal Finance said the use of Gen-AI has increased more than five times over the past year, with AI being deployed across growth, underwriting, collections, customer experience, audit and compliance, and employee productivity. Around 57% of the company’s overall code is now written by AI. AI-assisted bank-statement analysis, document-fraud detection, image intelligence, fraud alerts and automated customer interactions are already being deployed at scale.

Credit.ai: AI Improving Underwriting Productivity

The company’s Credit.ai initiative is aimed at improving credit decision-making and employee productivity. AI is being used to verify documents, analyse bank statements, identify fraud triggers, prepare pre-personal-discussion questionnaires, assess field-investigation requirements and generate credit assessments. The company reported that average decisioned amount per credit manager increased from ₹8.6 crore in Q1 FY25 to ₹12.6 crore in Q1 FY27, suggesting a significant improvement in credit-manager productivity.

Funding and Liquidity: Strong Liquidity Position

Piramal Finance reported borrowings of ₹82,345 crore, up 20% YoY, against net worth of ₹28,906 crore, resulting in a debt-to-equity ratio of 2.8x. The company maintained an average liquidity coverage ratio of 553% and cash and cash equivalents of ₹6,925 crore, equivalent to around 6% of assets. The cost of funds as a percentage of AUM improved to 6.26% in Q1 FY27 from 6.61% in Q1 FY26, while the cost of borrowings remained at 8.80%. This provides the company with a relatively strong liquidity position to support continued lending growth.

Legacy Book: Significant Reduction in Risky/Discontinued Exposure

A major part of Piramal Finance’s transformation has been the reduction of its legacy book. Legacy AUM has declined by 94% since March 2022 and stood at only ₹2,452 crore in Q1 FY27, representing approximately 2% of total AUM. The continued reduction in the legacy portfolio means that the company’s consolidated financial performance is increasingly being driven by its growth businesses rather than the discontinued legacy portfolio.

Management Strategy and Long-Term Goals

The company’s stated blueprint is built around four pillars: Growth, Profitability, Predictability, and building a future-proof, AI-native company. Its long-range goals include doubling AUM in approximately three years, achieving RoAUM above 3%, maintaining stable risk, and delivering steady earnings. With growth AUM increasing 32% YoY and profitability improving in Q1 FY27, the company believes it is progressing towards these long-term objectives.

Overall Investor Takeaway

Overall, the Q1 FY27 presentation points to a transformation of Piramal Finance into a growth-oriented, retail-focused and increasingly technology-driven NBFC. The strongest positives are 32% retail AUM growth, 67% PAT growth, improving NIM, declining operating costs, stable asset quality, strong retail disbursement momentum, expansion into rural and gold lending, and the increasing use of AI across underwriting and operations. The key areas investors should monitor going forward are whether the company can sustain high AUM growth without deterioration in asset quality, continue reducing its cost-to-income ratio, improve RoAUM towards its long-term target, and successfully scale newer businesses such as rural and gold loans.

Disclaimer

Disclaimer: This article is based on information and data provided in Piramal Finance Limited’s Q1 FY27 Investor Presentation and is intended solely for informational and educational purposes. It should not be considered investment advice, a recommendation, or an offer or solicitation to buy or sell any securities. The financial figures, business outlook, growth plans, and management commentary discussed are based on information available in the presentation and may be subject to change. Investors should conduct their own research and consult a SEBI-registered investment adviser or qualified financial professional before making any investment decisions. The author/website does not guarantee the accuracy, completeness, or future performance of the company or its stock and shall not be responsible for any investment losses.