Piramal Finance Limited (PIFINL)
India / Non-bank Financials
Active
Issuer Summary
Piramal Finance is a listed Indian Upper Layer NBFC that has substantially reduced legacy DHFL and former wholesale assets while expanding to retail AUM of INR 85,885 crore and total AUM of INR 101,230 crore. Domestically it is viewed as a high-grade AA+ / Stable NBFC, while its international ratings remain BB / Ba3. The main constraints are rapid retail growth, non-recurring factors included in reported profit, Wholesale 2.0 and real-estate exposure, and a non-deposit-taking funding structure. The credit view is improving, but the next areas to verify are earnings excluding non-recurring gains, retail credit costs, legacy recoveries, and the stability of LCR, ALM and foreign-currency funding.
At the current credit level, Piramal Finance can be treated domestically as a high-grade NBFC, but internationally it should be assessed as an improving sub-investment-grade financial issuer. The credit direction is moderately improving, supported by the reduction of legacy assets, retailisation, improvement in growth-business profit and the move to domestic AA+ ratings. However, the pace of improvement is not rapid and depends on credit costs in the fast-growing retail book, earnings power excluding non-recurring gains, the track record of Wholesale 2.0 and funding markets. The probability of a rapid near-term deterioration in credit quality is not high, but if delayed asset-quality deterioration in the fast-growing portfolio coincides with weakness in foreign-currency or NCD markets, rating tone and spreads could react before reported performance does.
The credit profile is supported by scale above INR 1 trillion of AUM, an 85% retail share, a 97% growth-business share, legacy AUM reduced to less than 3%, domestic long-term ratings of AA+ / Stable, strong liquidity, diversified funding and a capital adequacy ratio of 19.8%. The move away from the problems of DHFL and the former wholesale book has clearly improved the issuer’s risk profile. Improvement in growth-business PBT and RoAUM also shows that the company is moving beyond simple balance-sheet expansion toward monetisation.
The main constraint, however, is that the improved company profile has not yet been proven through a sufficiently full economic cycle. Retail AUM has grown rapidly and shows low 90+ DPD delinquency, but more post-disbursement history is needed. Reported PAT includes non-recurring gains, and legacy and other earnings items still move. Wholesale 2.0 appears to be designed more soundly than the former wholesale book, but because it is real-estate finance, individual-exposure risk remains. International ratings are BB / Ba3, so for foreign-currency bond investors the issuer remains a high-yield financial credit.
Issuer Reports
Current public reports for this issuer.