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Strong Q4FY26 numbers also marked a strong finish to FY26 for Piramal Finance, with consol AUM rising 25% YoY to ~Rs1.01trn and FY26 PAT at Rs15bn. Growth book accounts for ~97% of AUM (up 33% YoY), while Retail continues to anchor at ~85% of AUM. Legacy book reduced sharply to Rs28bn (~3% of AUM), and is expected to turn largely immaterial. Growth visibility is supported by branch expansion (~100 branches added in Q4) and focused scaling up of new segments such as gold loans and microfinance, along with the management’s continued openness to value-accretive inorganic opportunities. Operating efficiency continues to improve with tech-led productivity gains, supporting RoAUM expansion to ~2.1%, while leverage has increased to ~3.6x with a glide path toward the 4.5–5.0x in the medium term. Margins improved (NIM: ~6.5%), with the gap between consolidated and growth NIM narrowing and expected to converge as the legacy book turns immaterial, further aided by declining cost-of-funds (CoFs). Asset quality is stable, with normalization across unsecured segments. With AA+ ratings, strong liquidity, and visibility on COF reduction, the management has guided for ~25% AUM growth and ~50% PAT growth in FY27, with exit RoAUM of ~2.5% driven by margin expansion, operating leverage, and mix shift toward higher-yield segments. We maintain ADD while raising Mar-27E TP (by ~8%) to Rs2,000 (implying FY28 P/B of 1.3x)

Strong finish to FY26 with improving metrics

Piramal Finance delivered a strong Q4FY26, with growth AUM rising 33% YoY and contributing to ~97% of the total portfolio, while consolidated AUM grew 25% YoY to cross the Rs1trn mark. Consolidated NIM expanded to ~6.5% (+QoQ), supported by a gradual decline in CoFs and improving liability profile. Operating efficiency continued to improve, with retail opex-to-AUM declining to ~3.6%, driving growth RoAUM to ~2.1% (vs ~1.9% in Q3). The legacy book further reduced, to ~Rs28bn (~3% of AUM). Asset quality was stable-to-improving, with credit cost at ~1.5%, GNPA/NNPA at ~2.3%/1.6%, and retail 90+ DPD improving to ~0.6%.

Clear runway for profitable growth

The mgmt reiterated its medium-term roadmap of scaling up AUM to ~Rs1.5trn by FY28, driven by sustained ~25% growth in the retail-led franchise and a near-complete legacy rundown. Profitability trajectory remains intact, with target RoAUM of ~3%, supported by margin expansion (led by declining CoFs), improving product mix (higher share of unsecured/gold loans), and operating leverage, with opex-to-AUM moderating further. Leverage is expected to rise toward 4.5–5.0x, supporting RoE expansion. The AA+ rating upgrade is a key structural positive, with potential 50–80bps reduction in borrowing costs over time and improved funding access. Growth visibility is further supported by branch expansion, scaling up of new segments (gold loans, microfinance), and openness to value-accretive inorganic opportunities, while maintaining stable asset quality.

We tweak our estimates; reiterate ADD with revised up TP to Rs 2,000

Factoring in the Q4 performance and outlook, we marginally adjust our FY27-28 estimates which leads to our EPS increasing 3-5%. We retain ADD on Piramal /finance, while raising Mar-27E TP to Rs2,000 (implying FY28E P/BV of ~1.3x) from Rs1,850.

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