Piramal Finance Long-Term Debt Rating Upgraded to CARE AA+; Stable by CARE

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AuthorAbhay Singh|Published at:
Piramal Finance Long-Term Debt Rating Upgraded to CARE AA+; Stable by CARE
Overview

CARE Ratings has upgraded Piramal Finance's long-term bank facilities and debentures to 'CARE AA+; Stable'. This follows similar positive ratings from CRISIL and S&P Global. The upgrade reflects improved business stability, a steady reduction of legacy exposures, and a significant shift towards a retail-led loan portfolio.

Piramal Finance's Creditworthiness Gets a Significant Boost

Piramal Finance's long-term bank facilities and debentures have been upgraded to 'CARE AA+; Stable' by CARE Ratings, with total Assets Under Management (AUM) exceeding ₹96,000 crore.
Reader Takeaway: Credit profile strengthens on retail shift; legacy run-down key for sustained growth.

What just happened (today’s filing)

CARE Ratings has upgraded Piramal Finance Limited's long-term bank facilities and debentures rating to 'CARE AA+; Stable' from 'CARE AA; Stable'.

This upgrade follows similar positive affirmations from other major credit rating agencies. CRISIL had assigned an 'AA+/Stable' rating in January 2026, and S&P Global Ratings upgraded its rating to 'BB' in February 2026.

These upgrades signify enhanced financial stability and a stronger risk profile for Piramal Finance.

Why this matters

The improved ratings underscore increased investor confidence in Piramal Finance's strategic direction and operational resilience.

Such upgrades can lead to a more competitive cost of capital, allowing the company to access funds more affordably for its long-term growth and expansion plans.

This reflects positively on the NBFC sector's ability to manage its transition and strengthen its balance sheets.

The backstory (grounded)

Piramal Finance, part of the Piramal Group, has been actively transitioning its business model. It has focused on integrating its DHFL acquisition and shifting towards a retail-led portfolio, aiming for retail loans to constitute approximately 85% of its AUM by FY26.

The company has demonstrated a robust ability to raise capital, securing nearly ₹14,000 crore via ECBs in FY25-26 and USD 350 million from multilateral institutions like IFC and ADB in FY26.

This concerted effort to diversify funding and build a more granular retail book comes after a period where its parent, Piramal Enterprises Ltd (PEL), faced credit rating downgrades, highlighting the group's successful efforts to rebuild credit strength.

What changes now

  • Enhanced Investor Confidence: The 'AA+' rating is a strong signal to the market, potentially attracting a broader base of investors and lenders.
  • Improved Funding Costs: Higher ratings typically translate into lower interest expenses on borrowings, boosting profitability.
  • Strategic Validation: The upgrades validate Piramal Finance's strategy of de-risking its wholesale book and focusing on a scalable, retail-centric model.
  • Expanded Market Access: A stronger credit profile can open doors to new funding avenues and instruments.

Risks to watch

While the current rating action is positive, Piramal Enterprises Ltd (PEL), the parent company, faced a significant downgrade by S&P to 'BB-' from 'BB' in July 2023. This was attributed to concerns over asset quality and capital buffers following the DHFL acquisition. Although current ratings are strong, sustained asset quality management, especially in the wholesale segment and newly launched retail segments, remains a monitorable factor.

Peer comparison

Piramal Finance's new 'AA+' rating places it alongside strong peers like Cholamandalam Investment and Finance Company Ltd. and Shriram Finance Ltd., both of which also hold AA+ ratings. However, this upgrade signifies a recovery and strengthening of its credit profile, especially when viewed against its parent's past challenges. Top-tier peers like Bajaj Finance Ltd. continue to command superior AAA ratings.

Context metrics (time-bound)

  • Retail loans are projected to account for approximately 85% of total AUM by FY26.
  • Total Assets Under Management (AUM) currently exceed ₹96,000 crore.
  • Total outstanding borrowings are approximately ₹75,000 crore.
  • The company has secured nearly ₹14,000 crore via ECBs in FY25-26 and USD 350 million from IFC/ADB in FY26.

What to track next


  • Continued progress in scaling up the retail loan portfolio and meeting the 85% AUM target by FY26.

  • The successful integration and deployment of the recently raised multilateral funding of USD 350 million (with potential for up to USD 500 million).

  • Management's ability to further reduce legacy wholesale exposures and maintain healthy asset quality across all segments.

  • Any further positive rating actions from other agencies or upgrades from S&P.

  • The ongoing performance and seasoning of new retail product segments like gold loans.

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