Piramal Enterprises Q4 results: Company reports Rs 137 crore profit; announces merger into subsidiary

Piramal Enterprises Ltd (PEL) on Wednesday reported a consolidated net profit of Rs 137 crore for the March quarter against a loss of Rs 196 crore in the year-ago period, helped by write-backs on taxation and investments in alternative investment funds. The company reported a loss of Rs 1,683 crore for 2023-24 against a profit of Rs 9,969 crore in the year-ago period.

PEL also announced its merger into subsidiary company Piramal Capital and Housing Finance (PCHFL) to meet the RBI requirement around mandatory listing for top-tier financiers like it. The company said it aims to execute the transaction in up to a year by getting all approvals.

The resultant entity will be called Piramal Finance, and the shareholders of PFL will get one share for every PEL share they own, along with a non-convertible non-cumulative non-participating redeemable preference share of 67 of PFL, a statement said.

Jairam Sridharan, the managing director and chief executive of PCHFL, said that the merger will also help reduce borrowing costs as the corporate structure will become more simpler and the governance standards improve.

For the reporting quarter, PEL's core net interest income dipped by 10 per cent to Rs 755 crore. Sridharan attributed the fall to the 50 per cent decline in the legacy book which the company is winding down to focus on retail lending which it calls growth vertical. The overall assets under management grew at 8 per cent. The non-interest income was up 28 per cent to Rs 323 crore for the reporting quarter helped by a surge in the dividend income.

Sridharan said there was a benefit of around Rs 1,200 crore, which is almost equally split between favourable tax orders and recoveries from AIF investments done earlier following an RBI order, he said.

Additionally, the RBI's review in the AIF matter helped release Rs 1,067 crore by way of change in rules alone, he said, adding that there is a further Rs 2,000 crore of investments in AIFs which it continues to carry and any recoveries from it will benefit the profit line in the time ahead.

At present, the retail-to-wholesale mix has improved to 70:30 from 33:67 in the year-ago period. Sridharan said the growth achieved by the business makes it rework the FY28 targets, and pointed that it now expects retail to be 75 per cent of the book as against 70 per cent earlier and the overall AUM to grow to Rs 1.50 lakh crore from the earlier aim of Rs 1.20 lakh crore.

Going forward, Piramal is interested in the opportunities offered by small business lending, lending against gold and deepening in microlending, he said.

In the case of unsecured lending, FY24 was soft on the growth front because of the concerns expressed from all quarters, Sridharan said, adding that it is comfortable having the riskier loans at between 25-30 per cent of retail book.

To a question on RBI's proposed project finance guidelines, Sridharan said there will be "serious challenge" to lending if they are implemented in the present state and warned that there could be "serious supply shocks" as well because of it.

When asked about impact on its partnership with Paytm, Sridharan said the company will look at the pay down of the current book before thinking of ramping up new originations. The PEL scrip closed 3.63 per cent down at Rs 894.95 apiece on the BSE on Wednesday.