Piramal Finance’s multi-year business transformation is expected to deliver stronger financial results over the next 2 years. Its profit after tax (PAT) could grow at a compound annual growth rate (CAGR) of around 55% between FY26 and FY28, supported by rising retail lending, better margins and tighter cost management, according to Motilal Oswal Financial Services.
The lender’s legacy portfolio has declined to less than 2% of assets under management (AUM), while retail lending now contributes around 85%. The brokerage expects AUM to grow approximately 25% annually, reaching ₹1.6 lakh crore by FY28. The growth portfolio accounts for around 98% of AUM. Retail disbursements increased 44% year-on-year to ₹12,500 crore in Q1 FY27, while consolidated AUM grew around 25%, supporting the company’s FY27 growth target.
Product expansion and margin improvement
Piramal Finance is expanding higher-yielding businesses, including gold loans, micro-loans against property, microfinance and unsecured lending, alongside housing loans and loans against property. Disbursement yields stood at 15.5% for used-car loans, 16.6% for salaried personal loans and 18.8% for unsecured business loans, compared with 11.7% for housing loans and 12.8% for loans against property.
Its gold-loan network grew from 22 branches in March to 67 in June 2026, with a target of around 200 branches by the end of FY27. Cross-selling contributes 28–29% of business volumes, creating opportunities to serve its customer base of around 6 million while potentially reducing acquisition costs and supporting credit quality.
Net interest margin (NIM) is estimated to rise from 4.7% in FY26 to 5.4% in FY27 and 5.9% in FY28. NIM was around 6.5% in Q1 FY27, up 47 basis points year-on-year, while borrowing costs stood at about 8.8%. These figures are reported as stated in the brokerage assessment.
Cost efficiency and profitability outlook
AUM grew around 25% year-on-year in Q1 FY27, while operating expenses rose 10%. The cost-to-income ratio improved to 52.5% from 65.6%, and the operating expense-to-AUM ratio declined to 3.5% from 4.9% over 8 quarters, despite renewed branch expansion.
The company expects another 40–50 basis-point improvement in the expense-to-AUM ratio over 4–6 quarters and targets a 2.5% return on AUM by Q4 FY27. Credit costs remain around 1.6% in growth businesses, with tighter underwriting expected to support stable asset quality through FY27–FY28.
A ₹3,850 crore primary equity infusion is expected to strengthen capital and support expansion. The brokerage projects FY28 return on assets of 2.8% and return on equity of around 11.4%. It has maintained a Buy rating with a ₹2,480 target price based on a March 2028 sum-of-the-parts valuation. The stock trades at around 1.3 times estimated FY28 price-to-book value.
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