Synopsis: Housing finance stock fell around 5 percent despite a 67 percent YoY rise in Q1 FY27 and AUM growth to Rs 1,06,940 Cr, as investors focused on higher provisions and slower sequential growth.
The share of this company, which provides loans to Retail customers for the construction or purchase of residential property, loans against property, etc., came under pressure after posting Q1 numbers
With a market capitalization of Rs 47,444 crore, Piramal Finance Ltd’s share on Friday made a day low of Rs 2,075 per share, down by 5 percent from its previous close of Rs 2,184 per share. The share of this company gave a return of 60 percent over the last year.
Q1 Result Overview
QoQ Performance
The net interest income grew by 6 percent to Rs 1,442 in Q1 FY27 from Rs 1,362 in Q4 FY26, and pre-provision operating profit (PPOP) grew by 16 percent to Rs 804 in Q1 FY27 from Rs 694 in Q4 FY26. This was accompanied by a net profit decrease of 8 percent to Rs 461 in Q1 FY27 from Rs 502 in Q4 FY26.
YoY Performance
The net interest income grew by 43 percent YoY to Rs 1,442 in Q1 FY27 from Rs 1,010 in Q1 FY26, and pre-provision operating profit (PPOP) grew by 89 percent YoY to Rs 804 in Q1 FY27 from Rs 425 in Q1 FY26. This was accompanied by a net profit growth of 67 percent YoY to Rs 461 in Q1 FY27 from Rs 276 in Q1 FY26.
Q1 business performance
In Q1 FY27, the company reported strong business growth, with Assets Under Management (AUM) rising 25 percent YoY to Rs 1,06,940 Cr. Retail AUM increased 32 percent YoY to Rs 91,249 Cr, while wholesale AUM grew 27 percent YoY to Rs 13,238 Cr, showing healthy expansion across segments.
Profitability improved significantly during the quarter, with Profit After Tax (PAT) rising 67 percent YoY to Rs 461 Cr. Net Income Margin expanded by 47 bps YoY to 6.5 percent and remained stable on a QoQ basis. Cost-to-Income ratio improved to 52.5 percent in Q1 FY27 from 65.6 percent in Q1 FY26, supported by better operating efficiency.
Asset quality remained stable during Q1 FY27, with GNPA at 2.4 percent and NNPA at 1.6 percent. The company maintained a strong liquidity position with net worth of Rs 28,906 Cr, cash and equivalents of Rs 6,925 Cr, AUM-to-Equity ratio of 3.7x, and average Liquidity Coverage Ratio (LCR) of 553 percent. It also received a BBB Stable issuer rating from Japanese credit rating agencies.
What is leading the investor sentiment even after good Q1 numbers?
Sequential Profit Decline (QoQ): While the YoY numbers looked impressive, the company’s PAT actually declined by 8 percent quarter-on-quarter, down from Rs 502 crore in Q4 FY26 to Rs 461 crore in Q1 FY27.
Surge in Loan Loss Provisions: The company saw a massive 127 percent YoY increase in loan loss provisions & Fair Value (FV) losses, which escalated to Rs 460 crore in Q1 FY27 compared to Rs 202 crore in Q1 FY26.
Sequential Growth Slowdown in AUM: AUM growth moderated on a sequential basis in Q1 FY27, with Assets Under Management rising 5.6 percent QoQ to Rs 1,06,940 Cr from Rs 1,01,230 Cr in Q4 FY26. While the company delivered strong 25 percent YoY AUM growth, the pace of quarterly expansion slowed during the period.
Sequential Improvement in Net Interest Margin (NIM) & Borrowing Costs: Net Interest Margin (NIM) remained stable on a sequential basis at 6.5 percent in Q1 FY27, despite expanding 47 bps YoY. Additionally, the Cost of Borrowing remained unchanged QoQ at 8.8 percent, indicating limited near-term improvement in funding efficiency.
Anticipated Equity Dilution: The Board approved a capital-raising plan of up to Rs 4,000 crore. Large fundraisings often trigger immediate investor caution regarding potential near-term equity dilution.
About the Company
Piramal Finance Ltd (formerly Piramal Capital & Housing Finance Ltd) is a major Indian financial company. Headquartered in Mumbai, it manages assets over ₹1,00,000 crore and serves over 5 million customers. It provides loans for housing, vehicles, and small businesses, especially in small towns across India.
Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on tradebrains.in are their own, and not that of the website or its management. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution while investing or trading in stocks. Trade Brains Technologies Private Limited or the author are not liable for any losses caused as a result of the decision based on this article. Please consult your investment advisor before investing.
