At a Glance
Piramal Enterprises (PEL) just pulled off a 52% YoY jump in PAT (₹276 Cr) on the back of 22% AUM growth and an NBFC play that’s slowly finding its groove. However, with a P/E of 56x, ROE of just 1.6%, and a CFO resignation thrown into the mix, investors are left wondering: is this a revival or just a well-dressed balance sheet?
1. Introduction
Ajay Piramal’s empire has been through enough drama to rival a Bollywood family saga – pharma spin-offs, real estate bets, and NBFC expansion. Q1 FY26 results offer a glimmer of hope: profits surged, lending volumes improved, and the company plans to merge with Piramal Finance by September 2025. But let’s not forget – the stock is trading like it’s already the Bajaj Finance of tomorrow.
2. Business Model (WTF Do They Even Do?)
PEL is no ordinary NBFC. It plays across:
- Retail Lending: Housing loans, MSME finance, consumer credit.
- Wholesale Lending: Real estate financing, structured credit.
- Investments: Fund platforms and AIF stakes.
- Legacy Assets: Still cleaning up post-DHFL acquisition.
In short, they lend money, invest money, and occasionally burn money.
3. Financials Overview
Q1 FY26 Snapshot
- Revenue: ₹2,643 Cr (↓6% YoY)
- Interest Expense: ₹1,492 Cr (↑9% YoY)
- PAT: ₹276 Cr (↑52% YoY)
- GNPA: 2.83% | NNPA: 2.01%
FY25 Recap
- Revenue: ₹10,609 Cr
- PAT: ₹580 Cr (after a loss in FY24)
- ROE: 2% – weak for a lender.
4. Valuation
- P/E: 56x – insane for an NBFC with sub-2% ROE.
- P/B: 1.08x – priced at book.
- EV/EBITDA: ~13x.
Fair Value Range: ₹1,050 – ₹1,200 (current price ₹1,295 looks stretched).
5. What’s Cooking – News, Triggers, Drama
- Q1 FY26: Profit turnaround, AUM up 22%.
- Merger with PFL: Expected by Sept 2025 – could simplify structure.
- CFO Resignation: Upma Goel resigns, new CFO Vikash Singhla steps in.
- Fundraising: Approved ₹1,000 Cr NCD issuance.
- Ratings: CRISIL/ICRA stable outlook.
6. Balance Sheet
| (₹ Cr) | FY23 | FY24 | FY25 |
|---|---|---|---|
| Assets | 83,752 | 82,605 | 94,943 |
| Liabilities | 52,741 | 56,048 | 67,848 |
| Net Worth | 31,011 | 26,557 | 27,096 |
| Borrowings | 49,583 | 53,611 | 65,577 |
Comment: Heavy borrowing, net worth crawling up.
7. Cash Flow – Sab Number Game Hai
| (₹ Cr) | FY23 | FY24 | FY25 |
|---|---|---|---|
| Operating | 1,378 | 95 | -8,091 |
| Investing | -646 | -1,581 | -1,854 |
| Financing | -3,287 | 1,031 | 11,664 |
Observation: Operating cash flow went negative in FY25 – red flag.
8. Ratios – Sexy or Stressy?
| Ratio | FY23 | FY24 | FY25 |
|---|---|---|---|
| ROE | 6% | 1% | 2% |
| ROCE | 7% | 6.7% | 6.8% |
| PAT Margin | -19% | 5% | 5.5% |
| D/E | 1.8 | 2.0 | 2.4 |
Verdict: Stressy, not sexy – high leverage, low returns.
9. P&L Breakdown – Show Me the Money
| (₹ Cr) | FY23 | FY24 | FY25 |
|---|---|---|---|
| Revenue | 8,981 | 10,110 | 10,609 |
| Financing Profit | -2,447 | -584 | 263 |
| PAT | 9,969 | -1,684 | 580 |
Comment: FY24 was a nightmare; FY25 recovery is fragile.
10. Peer Comparison
| Company | Revenue (₹ Cr) | PAT (₹ Cr) | P/E |
|---|---|---|---|
| Bajaj Finance | 73,107 | 17,425 | 31 |
| Shriram Finance | 43,778 | 8,508 | 14 |
| Muthoot Finance | 20,214 | 5,333 | 20 |
| Piramal Ent. | 10,609 | 580 | 56 |
Verdict: PEL trades like a leader, performs like a struggler.
11. Miscellaneous – Shareholding, Promoters
- Promoter Holding: 46.1%
- FIIs: 15.2% (falling)
- DIIs: 15.1% (increasing)
- Public: 22.7%
12. EduInvesting Verdict™
Piramal Enterprises is at a turning point – profits are improving, but the balance sheet remains heavily leveraged and ROE depressingly low. The upcoming merger with PFL is a key trigger; if executed well, it could streamline operations and improve margins. However, the valuation premium leaves little room for error.
SWOT Analysis
- Strengths: Brand legacy, diversified lending, strong promoter backing.
- Weaknesses: Low ROE, high leverage, volatile earnings.
- Opportunities: Merger synergy, retail lending scale-up.
- Threats: Interest rate risks, NBFC competition, legacy asset cleanup.
Final Word: PEL is like a patient showing early recovery signs – but at a P/E of 56, you’re paying for a full cure.
Written by EduInvesting Team | 29 July 2025
SEO Tags: Piramal Enterprises, NBFC Stocks, Q1 FY26 Results
