Piramal Finance (PIRAMALFIN) Q4 22/23 earnings summary

Executive summary

• FY23 revenue and total income increased, but reported results swung to a substantial loss, driven chiefly by a one-time goodwill impairment, higher wholesale credit and fair-value losses, and increased operating costs.

• Strategy entered Phase III, prioritizing sustainable growth, profitability, a larger retail book, and a planned shift toward a two-thirds retail and one-third wholesale loan mix over five years.

• Retail lending expanded strongly, while overall AUM declined 3% YoY amid wholesale book rundown; capital adequacy remained above regulatory minimums.

Financial highlights

• Consolidated total income was Rs 6,66,915 lakh vs Rs 6,10,475 lakh in FY22; revenue from operations was Rs 6,60,631 lakh vs Rs 6,03,861 lakh.

• Consolidated PAT was a loss of Rs 7,40,136 lakh vs profit of Rs 54,015 lakh; basic and diluted EPS were both (Rs 3.46) vs Rs 0.25.

• Consolidated loss before exceptional items and tax was Rs 2,53,671 lakh vs profit of Rs 87,110 lakh; exceptional goodwill impairment was Rs 10,25,681 lakh.

• Consolidated finance costs rose to Rs 3,46,997 lakh from Rs 3,33,706 lakh; operating expenses were Rs 1,868 crore vs Rs 848 crore, reflecting expanded retail operations.

Outlook and guidance

• Target loan mix is two-thirds retail and ~one-third wholesale over five years; Q4 FY23 mix was 50:50, with further retail scaling and cross-selling planned.

• Regulatory Principal Business Criteria thresholds were missed for FY23; the stated plan targets compliance by March 31, 2024 through a housing-finance focus and wholesale AUM reduction.

• Priorities include lowering borrowing costs, diversifying funding, optimizing capital, maintaining provisions, and improving profitability through growth and product-mix changes.

• Industry outlook cited 13%-14% NBFC AUM growth for FY24 and 12%-14% growth for retail-focused NBFCs.