Piramal Enterprises Limited — Investor Meet, 31-01-2025: Analysts/Institutional Investor Meet/Con. Call Updates

**Financial Performance:** Piramal Enterprises reported a consolidated net profit of INR 39 crore for the quarter. Profit before tax was INR 91 crore, affected by a decrease in non-core income from property sales and dividends. The growth business achieved a PBT-RoAUM of 1.4%. Total gross non-performing assets (GNPA) and net non-performing assets (NNPA) ratios were stable at 2.8% and 1.5%, respectively. Consolidated capital adequacy stood strong at 23.7%.

**Future Outlook and Growth Drivers:** Management highlighted the move towards a growth-centric business mix, with Retail and Wholesale businesses representing 87% of total assets under management (AUM). The outlook remains optimistic with expected improvements in public CAPEX and domestic demand conditions. Continued focus will be on maintaining portfolio quality while enhancing profitability through margin expansion and operational efficiency.

**Order Book and Operational Updates:** The wholesale lending segment reported a 60% year-on-year AUM growth to INR 8,916 crore, with consistent collection efficiency. Disbursements in retail lending increased by 37% year-on-year. Significant progress was made in reducing the legacy AUM to 13% of total AUM, on track to reach below 10% by March 2025.

**Analyst Q&A Insights:**

- *Revenue and Profitability:* Analysts inquired about the impact of the legacy book haircut on future provisions and profitability. Management confirmed a consistent haircut of around 24%, maintaining net worth.

- *Market Position and Competitive Landscape:* Queries arose about the expansion and performance in the retail segment, with management emphasizing improved operational leverage.

- *Operational Challenges or Risks:* Concerns were raised regarding credit risk, particularly in unsecured segments. However, management reassured investors of a stable delinquency trend.

- *Capex and Capital Allocation:* Analysts sought clarity on capital allocation strategies amidst growing borrowings and diversification efforts. Management highlighted a conservative approach to maintain healthy ratios.

- *Strategic Priorities and Long-Term Vision:* Discussions on organic vs. inorganic growth reflected an intention to focus on existing business expansions in areas like microfinance and personal loans.

**Market or Regulatory Updates:** Regulatory discussions are ongoing regarding the merger of Piramal Enterprises with Piramal Capital and Housing Finance, anticipated to complete by September 2025.

**Strategic Focus Areas:** The company focuses on improving operating metrics such as opex to AUM ratios while aiming to uphold a diversified product offering within the retail space to mitigate risks.

**Investor Insight:** Overall, the company’s financial health appears solid, with robust growth potential in the retail segment, supporting an inclined view towards a 'buy' position. Effective management in reducing legacy AUM and leveraging market dynamics presents a compelling investment case amidst cautious optimism in the near-term credit environment.