Piramal Enterprises reports three fold rise in Q2 PAT

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Non-banking finance company (NBFC) major Piramal Enterprises on Wednesday reported a more than threefold rise in its consolidated net profit for the quarter ended September at ₹163 crore, on account of a lower base. The NBFC also noted a rise in stress from the unsecured credit segment.

During the quarter, the NBFC’s net interest income (NII) rose 17 per cent year-on-year (y-o-y) to ₹881 crore, whereas net interest margin (NIM) fell 10 basis points (bps) sequentially to 6.6 per cent due to higher cost of funds.

Its total assets under management (AUM) rose 12 per cent y-o-y to ₹74,692 crore and 73 per cent of overall assets were retail. Operating expenses, meanwhile, rose 12 per cent on year to ₹741 crore during Q2.

Asset quality

The gross and net non-performing asset (GNPA, NNPA) ratio of Piramal Enterprises rose to 3.1 per cent and 1.5 per cent in Q2FY25, respectively, from 2.7 per cent and 1.1 per cent last quarter, largely due to stress emanating from unsecured credit segments.

Jairam Sridharan, MD of Piramal Capital and Housing Finance, said 80 per cent plus of all credit risk issues that the NBFC is facing are due to over-leverage of borrowers. “A lot of this (NPAs) is unsecured business, rest of the businesses have not contributed very much to stage 3 (NPAs) yet…In unsecured business loans, which is one of the more challenged segment, our approval rate today is in range of 15 per cent…,” the MD said.

He said that after a decade of pristine retail asset quality, the cycle has turned, and this may be the start of an adverse retail asset quality period. “It is not the end, it is more of a beginning…we expect that entire industry should continue to remain vigilant in H2FY25 as well…,” he said.