At a Glance
Piramal Finance, the phoenix born out of DHFL’s ashes, posted a Q1 FY26 profit of ₹276 crore. That’s a 52% YoY jump, proving even fallen angels can learn to fly if retail lending wings are strong enough. AUM crossed ₹80,000 crore, margins expanded, and the stock still trades like it owes everyone an apology. Retail book good, legacy book bad, management smiling. Investors? Still traumatised.
Introduction
Piramal Finance’s story reads like a Bollywood redemption arc. First, there was the DHFL scandal – a horror movie with missing money and endless NPAs. Then came the acquisition, a turnaround attempt, and now a timid profit parade. Q1 FY26 looks promising, but the market isn’t throwing confetti yet.
The company is aggressively pivoting to retail lending with AI underwriting, co-lending with ICICI, and a fintech-like ambition. But in a sector where one bad loan can sink the Titanic, can Piramal really stay afloat? Let’s dig.
Business Model (WTF Do They Even Do?)
Simple version: They lend money – retail housing, MSME, LAP, vehicles. They’ve largely dumped corporate loans (legacy mess) and now push growth via retail products. Co-lending with banks improves scale without overleveraging. AI/ML screens borrowers faster and supposedly smarter than humans.
Their revenue streams:
- Retail AUM – Loans to actual paying humans.
- Legacy AUM – Old DHFL corporate junk, slowly written off.
- Partnership Lending – Collaborations with ICICI and fintechs to expand reach.
Think of them as a reformed bad boy trying to date conservative investors.
Financials Overview
| Metric | Q1 FY26 | Q1 FY25 | YoY Change |
|---|---|---|---|
| Consolidated PAT | ₹276 Cr | ₹137 Cr | +52% |
| Net Interest Income | ₹1,010 Cr | ₹806 Cr | +25% |
| AUM | ₹80,689 Cr | ₹68,900 Cr | +17% |
| NIM | 5.9% | 4.9% | +100 bps |
Margins are widening, profit is back, but credit cost still lurks. Profitability isn’t yet in “wow” territory, but at least it’s not another obituary.
Valuation
Let’s run three valuation lenses:
- P/E
- Annualised PAT ≈ ₹1,100 Cr
- Market Cap ≈ ₹26,000 Cr
- P/E ≈ 24x
- P/BV
- Book Value ≈ ₹26,500 Cr
- Price/Book ≈ 1.0x
- EV/EBITDA
- EV ≈ ₹26,000 Cr
- EBITDA ≈ ₹1,000 Cr
- EV/EBITDA ≈ 26x
Fair Value Range: ₹350 – ₹520 per share.
Anything outside that? Either bubble or bargain bin.
What’s Cooking – News, Triggers, Drama
- Legacy Loan Shrinkage: Legacy AUM now just 9% of total, expected to halve by FY26.
- Co-Lending Push: Partnership with ICICI Bank boosting reach.
- Real Estate Financing: ₹250 Cr debt to Elan Group’s Gurgaon project.
- Fintech Play: AI underwriting cuts bad loan risk by up to 20%.
Drama quotient: Moderate. Growth triggers: Retail scale-up and better asset quality.
Balance Sheet
| Item | ₹ Cr (FY25) |
|---|---|
| Assets | 80,689 |
| Liabilities | 54,189 |
| Net Worth | 26,500 |
| Borrowings | 45,064 |
Auditor’s Joke: Looks stable, but with borrowing this high, don’t sneeze too hard.
Cash Flow – Sab Number Game Hai
| Year | Ops | Investing | Financing |
|---|---|---|---|
| FY25 | Positive-ish | Negative | Mixed |
Comment: Cash from operations improving, but financing remains a lifeline.
Ratios – Sexy or Stressy?
| Ratio | Value |
|---|---|
| ROE | 4% |
| ROCE | 7% |
| P/E | 24x |
| PAT Margin | 1.8% |
| D/E | 1.7x |
Roast: ROE so low it barely registers. PAT margin okay-ish. P/E tolerable if growth continues.
P&L Breakdown – Show Me the Money
| Quarter | Revenue | EBITDA | PAT |
|---|---|---|---|
| Q1 FY26 | ₹2,642 Cr | ₹1,000 Cr* | ₹276 Cr |
(*Estimated from margin)
Comment: Profits growing, but not champagne-worthy.
Peer Comparison
| Company | Revenue | PAT | P/E |
|---|---|---|---|
| Bajaj Housing | ₹9,983 Cr | ₹2,264 Cr | 42x |
| LIC Housing | ₹28,110 Cr | ₹5,442 Cr | 6x |
| PNB Housing | ₹7,884 Cr | ₹2,042 Cr | 13x |
| Piramal Finance | ₹8,604 Cr | ₹485 Cr | 24x |
Comment: Piramal is neither the cheapest nor the most profitable. Middle child vibes.
Miscellaneous – Shareholding, Promoters
- Promoter Holding: 39.2% (steady)
- FII Holding: Fell to near-zero (they left after the DHFL hangover)
- Public: 57% (ouch, retail bagholders)
Promoter Ajay Piramal continues his “turnaround specialist” act, while FIIs watch from afar.
EduInvesting Verdict™
SWOT
- Strengths: Retail AUM growth, AI-driven underwriting, co-lending with ICICI, improving margins.
- Weaknesses: Low ROE, heavy borrowings, legacy overhang.
- Opportunities: Retail lending boom, scaling fintech partnerships, exit of legacy DHFL loans.
- Threats: Any rise in credit costs or rate hikes can derail profitability.
Final Word
Piramal Finance is like that student who barely passed for years and suddenly scores 75%. Great improvement, but still not top of the class. The retail lending push is paying off, margins are widening, and the company is slowly regaining investor trust. However, legacy loans, thin ROE, and high debt mean this isn’t a fairy tale yet.
If management sustains growth AUM with controlled credit costs, the stock’s current P/B of 1x looks tempting. But history reminds us: this is not a stock for the faint-hearted. Watch it, don’t worship it.
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