Piramal Finance shares dropped 4.83% to ₹2,080.90 on Friday after the company reported a 43% jump in net interest income. While the quarterly results showed strong growth in retail assets, investors opted for profit-booking. The company also announced a potential ₹4,000 crore fund-raising plan to support future expansion.
Piramal Finance Limited saw its stock price decline by 4.83% on the National Stock Exchange on Friday, trading at ₹2,080.90. The drop followed a session characterized by significant selling, which made up over 78% of the trading volume by mid-morning. This negative price movement occurred immediately after the company released its first-quarter financial results, which showed strong top-line and asset growth.
Strong Financial Performance and Asset Growth
The company reported a 25% year-on-year increase in its assets under management, reaching ₹1,06,940 crore. Retail lending was a key driver, with retail assets growing by 32% to ₹91,249 crore. Profitability metrics also showed improvement, as the company’s net interest income rose by 43% compared to the same period last year. Additionally, the cost-to-income ratio improved significantly, falling to 52.5% from 65.6% in the previous year, indicating higher operational efficiency. Despite these figures, the stock retreated from its recent 52-week high of ₹2,220, set earlier in July.
Analyst Views on Valuation and Return Ratios
Market experts remain divided on the outlook for the stock. Several brokerages, including Motilal Oswal, Nomura, and JM Financial, maintained positive ratings, citing strong execution and profit growth projections. However, some analysts expressed caution regarding valuation and capital efficiency. Jefferies, which holds a neutral view, noted that the stock’s current price relative to its book value may limit future gains, especially given the company's expected return on equity—a measure of how effectively a company generates profit from shareholder capital—which is projected to remain below 12% through FY29. HDFC Securities also maintained a conservative stance, highlighting that the company's current use of borrowings might weigh on its return on equity in the near term.
Asset Quality and Future Funding
Asset quality appears stable, with gross non-performing assets reported at 2.4%. While there was a small rise in mortgage payment delays among salaried IT employees in South India, the management indicated that this is not a widespread issue. Looking ahead, the company has secured board approval to raise up to ₹4,000 crore in funds. This move is intended to provide capital for future growth, though the actual timing will depend on shareholder consent and market conditions. Investors will likely monitor how this capital is deployed and whether the company can maintain its retail asset growth while improving its return on equity in the coming quarters.