DEAR STAKEHOLDERS,
As I write to you with my reflections on the year gone by, I am pleased
to report not only our achievements in FY2025 but also the remarkable progress Piramal
Enterprises has made since embarking on its transformation journey three to four years
ago. As part of our strategic roadmap revamp, we have been laying a strong foundation to
build a robust, well-diversified NBFC—one that drives lasting positive change,
fosters a strong corporate culture, and nudges value creation and sustained growth.
Today, I am encouraged to share that we have met all our stated
objectives for FY2025 and greatly cemented our position as an at-scale financial services
company, set on a path of consistent and superior earnings growth.
A Year of Out performance
At the beginning of FY2025, we had set out to reduce our legacy AUM
from Rs 14,572 crore to below Rs 7,000 crore by year-end. I am happy to announce that we
ended the year with Rs 6,920 crore in legacy AUM—now just 9% of our total book.
Additionally, we made AIF recoveries of Rs 1,601 crore, delivering gains of Rs 926 crore.
When we wrote off this portfolio in FY2024, we had expressed confidence in achieving
meaningful recoveries—and we have delivered.
Our consolidated AUM grew by 17% y-o-y to Rs 80,689 crore, exceeding
our stated target of 15% y-o-y growth during FY2025. Beyond business metrics, we also set
out to improve the operating efficiency of our Growth business—a key driver of
profitability expansion. We reduced the opex-to-AUM ratio of our Growth business to 4.0%
in Q4 FY2025, vs a target of 4.6%. In every metric we committed to, we met or outperformed
our objectives for the year.
In the last three years, we have successfully scaled a strong Retail
Lending business, refining our execution strategy and successfully navigating a complex
credit risk environment. As of March 2025, our Retail AUM grew 35% y-o-y to Rs 64,652
crore, with secured loans comprising 78% of the portfolio, reflecting quality and
resilience.
With 517 branches across 428 cities in 26 states and a 24% growth in
our customer franchise to 4.7 million, FY2025 was a truly transformative year, marked by
significant strides in digital engagement, customer service, collections, and long-term
brand investment. While we added 27 new branches in FY2025—compared to about 90
annually in the prior two years—our focus this year was on optimising performance and
expanding product availability. The consistent improvement in operating leverage and
stable asset quality reinforces our confidence in the continued, steady scale-up of our
multi-product retail lending business.
The mortgage segment, comprising housing loans and Loans Against
Property (LAP), delivered strong performance with 34% y-o-y growth, reaching Rs 43,841
crore. Mortgages now represent a majority of our retail AUM at 68% and 54% of the total
AUM. Importantly, this book has maintained strong asset quality, with a stable (90+ DPD)
delinquency ratio of ~0.5% over the past three years.
Our Wholesale 2.0 business also had a productive year, disbursing Rs
7,192 crore across real estate and midmarket corporate lending—representing 22% y-o-y
growth. The average disbursement of Rs 47 crore per loan highlights the granularity of our
approach. With continued tailwinds in these segments, FY2026 will see calibrated growth in
this business line.
A Single Entity and a Simplified Corporate Structure
PEL has significantly simplified its corporate structure. Following the
demerger of our pharma business in September 2022, we are now in the final stages of
merging Piramal Enterprises with its NBFC subsidiary—Piramal Finance. During the
year, Piramal Capital & Housing Finance Ltd. was renamed Piramal Finance Ltd. and
converted from an NBFC-HFC to an NBFC-ICC. Piramal Finance is classified as an upper-
layer NBFC and ranks among the top 10 private-sector NBFCs in India.
We have received RBI approval for the merger of Piramal Enterprises and
Piramal Finance. The NCLT process is underway and expected to conclude by around September
2025.
With this, we culminate our multi-year transformational
journey—moving forward as a unified, agile, and purpose-driven NBFC.
Significant Embedded Value in Our Balance Sheet
In parallel with structural simplification, we have monetised several
pockets of value in our balance sheet—and we believe there remains significant
embedded value that we expect to unlock over the next one to two years.
Upon completion of the merger, the combined entity will benefit from a
tax shield of -Rs 14,500 crore in assessed carry-forward losses. Additional monetisation
and recovery opportunities remain in our Shriram GI and LI investments, and in our AIF
portfolios. We also expect to receive deferred consideration of about US$140 million in
FY2026 from the 2018 sale of our Piramal Imaging business.
A More Stable Earnings Profile
As the Legacy business winds down and the Growth business scales up,
our consolidated AUM growth and net interest margins (NIM) have grown steadily over the
last 6-8 quarters. Further, our overall consolidated earnings are now more stable.
In FY2025, Growth AUM rose 36% y-o-y to Rs 73,769 crore. Growth
business operating profit grew by 34% y-o-y to Rs 1,890 crore. Growth business credit cost
was at 1.6% in FY2025, vs 0.8% in FY2024. Excluding POCI recoveries and other gains,
credit cost stood at 1.9% vs. 1.4% in FY2024. As a result, the Growth business delivered a
PBT of Rs 896 crore. FY2025 marked a strong turnaround in our financial performance, with
a consolidated net profit of Rs 485 crore compared to the Rs 1,684 crore loss in
FY2024—reflecting our strategic progress.
One Year, Many Wins
Our retail lending business delivered beyond growth and profitability.
We significantly ramped up new liability channels through Direct Assignments (DA) and
co-lending partnerships. In just two years, we have raised over Rs 7,000 crore through DA.
In its first year, co-lending brought in Rs 1,000 crore. We now have 16 DA and co-lending
partners, including India's largest PSU bank, two of the top three private banks, and the
country's largest NBFC. We also leveraged Common Services Centres (CSCs) as a new channel
for asset gathering, by disbursing over Rs 1,800 crore in FY2025. Almost our entire branch
network is now CSC-active.
Campaigns like 'Parakh' and the second phase of 'Hum Kaagaz Se Zyada
Neeyat Dekhte Hain' reflect our sincere attempts to understand our customers beyond
paperwork, tapping into their true 'Neeyat,' i.e., intent and aspirations. These
initiatives highlight the human stories behind the numbers and redefine how Bharat lends.
Our successful deployment of traditional and generative AI across the
businesses reflects our commitment to operational excellence and technology-led scale. Our
improved retail opex-to- AUM ratio—better than initial guidance—has been driven
by AI investments now embedded across risk, productivity, controls, and more.
Rooted in our core values of Knowledge, Action, Care, and Impact, we
continue our mission of democratising credit. Over the last three years, we have built a
strong retail lending franchise—anchored in trust, powered by technology, and driven
by our deep understanding of 'Bharat.' We remain committed to 'Doing Well and Doing Good'
in every sense.
FY2025 marked a milestone year in our global borrowings programme, with
a total raise of US$815 million. Of this, US$550 million was secured through social loans
and sustainability-linked bonds. External Commercial Borrowings (ECBs) now constitute 10%
of our total borrowings.
As we expand deeper into semi-urban and rural markets, we aim to
increase our borrowings from global sources to ~17% by FY2026—broadening
international participation into India's financial inclusion story.
The Best is Yet to Come
With strong performance across our retail and wholesale businesses in
FY2025, we are now well positioned to build upon the platform and leverage the investments
that have been made.
As our three-year transformation journey nears completion, we look
ahead with optimism.
In FY2026, we expect to further build on the momentum, growing our
total AUM by about 25% y-o-y to exceed Rs 1 lakh crore, with Growth AUM projected to rise
~30% y-o-y. Retail lending is expected to contribute 80-85% of total AUM.
We also expect our Legacy AUM to decline further to Rs 3,000-3,500
crore in FY2026—becoming negligible relative to our overall balance sheet
Our Growth business profits, coupled with monetisation of embedded
value, are expected to drive robust earnings in FY2026. We currently estimate consolidated
PAT of over Rs 1,300 crore in FY2026, up from Rs 485 crore in FY2025.
As this phase of transformation concludes, I want to express my
gratitude to all stakeholders for their patience, continued trust and conviction. Your
support has been instrumental in redefining what PEL stands for in financial services. We
stand at the foothold of a more focused, agile, and value-driven enterprise.
To our teams and esteemed Board, thank you for your dedication and
unwavering belief in our core values. As we embark on the next phase of our
journey—with clarity, confidence, and conviction—I sincerely thank our
customers, investors, regulators, and our people for being part of this remarkable,
transformational journey.
Let's continue to dream bigger.
Best regards,
Ajay G. Piramal
Chairman