Piramal Finance Limited CC-Feb26.pdf · 2026-01-23
Thanks, Avinash for your questions. Both really good questions. Firstly, let me explain what PL is in our context and how it differs from digital loans. PL is for us definitionally branch- originated business. So, it's personal loans to salaried individuals. And the whole thing is originated in the branch. Digital loans could be both salaried and self-employed customers. They are originated digitally. The yields that you see here are all yields to us. These are not yield to customer s. The yield to us and yield to customer pretty much the same in branch here. So, that makes no difference. So, the 17 we get is the 17 the customer pays. In digital, however, it is different. The yield to customer is actually much higher than what you see here. What we show here is the yield to us, net of what we pay off to our originating partners. The reason this number is smaller at 14 .5% odd, compared to the peer is that on the right-hand side, in the digital loans, we are working right now almost exclusively in an FLDG construct. So, roughly 95% of our originations right now are FLDG backed, which essentially means that our credit cost is near zero. And of course, all acquisition costs belong to the originating partner as well. So, the economics to us are actually very comparable between the 2. In fact, one could argue that it's slightly better in digital. But the economies are very comparable between the 2, even though digital shows up as slightly lower yields. To your point on are such yields sustainable. You and I both know what has happened to the rate environment in the last 9 months. It has been tight. You see a lot of single-digit interest rates being offered for personal loans to top tier employees in the PL world. We have held on to 17% plus throughout this entire period. Will we be able to maintain 17% plus in Q4? It is not obvious to me, right? It is possible that in Q4 that number falls a little bit, but it's unlikely to do too much. So, I would not worry about it too much. On the margin, something will change, but it's generally a Q4 effect. I don't think anything structural has happened in that market. Moving on to your second question on growth targets and the fact that we have continued to reiterate our 25 % AUM growth goal for the year, we feel very confident of our ability to get there. As you have seen now, 9 months have gone. Our Growth book is growing at roughly 35% and Growth book is now 95 % of our entire book. So, if 95% of your book is growing at 35 %, achieving 25% doesn't seem like a really big ask. And since it's AUM we are talking about, most of that is already in the back. So, we are not betting on any big, huge thing happening in Q4 for us to actually achieve that goal. So, I will continue to reiterate that 25% is something that we will achieve at the end of the year as guided at the beginning of the year. You had a question on whether excess capital is going to make this segment overheated or there is a margin compression possibility. See, in general, we are seeing a declining rate environment. In declining rate environments, margins do compress. We have not seen enough of that margin compression yet. RBI has cut rates by what, 125 basis points. We have not seen much margin compression at all so far. So, it's already surprising that we have not seen margin compression. If there is a little bit more that happens from here on , in terms of RBI -led rate cut, yes, you should expect to see a bit of margin compression, but that's cyclical, not structural. I hope that was good, Avinash. Let's move to the next question.
Thanks for that question, Avinash, it's a good one. Let me first, make a small errata, as I was speaking, Vikas and Imtiaz messaged me offline, I misspoke a little bit with respect to the 100 branches, so let me correct what I said before. 100 branches in Q4, the mix is 25 of them full service, 20 gold , and 55 microfinance. I think it's a slight modification to what I said before . Imtiaz and Vikas tell me that this is what they are going after in Q4 . So, slight modification there, but yes, we are opening branches . Yes, we are interested in gold and microfinance . And yes, we do remain interested in organic as well. Good deals will come when they come, and you know what our multiples are on our stock, and gold companies are at a very different place right now. So, it might or might not be realistic for one to actually think about an acquisition at an appropriate price right now. But as an institution, Piramal has always had a DNA for M&A and has done it very successfully. Over the years, we continue to remain open in these 2 areas for any good, interesting opportunities. Nothing very specific to report though, like there is no transaction that I need to talk about right now.