Piramal Enterprises Eyes 15% Growth in Asset Management by FY25

Non-bank lender Piramal Enterprises aims to boost its growth rate to 15% and expand its assets under management (AUM) to Rs 80,000 crore in the current fiscal year, according to Chairman Ajay Piramal. The company had previously reported an 8% growth in AUM at a consolidated level in the last fiscal year.

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The chairman revealed these targets during the annual general meeting held on Monday. Despite a significant reduction in the legacy wholesale business, the company is focused on increasing its overall AUM by 15% to reach Rs 80,000 crore. He mentioned that the legacy AUM will constitute less than 10% of the total AUM by the end of FY25 and less than 5% by FY26.

Retail Loans as Growth Business

Currently, retail loans make up 70% of the overall AUM, which the company refers to as its growth business. Recently, Piramal Enterprises crossed the Rs 50,000 crore milestone in retail loans. The chairman also stated that the overall AUM is expected to nearly double within three years, reaching Rs 1.5 lakh crore by the end of FY28 from the Rs 80,000 crore target set for end-FY25.

The share of retail business in the overall AUM is projected to grow to 75% by FY28. Additionally, Piramal mentioned that they are expanding their Wholesale 2.0 book, which includes cash flow and asset-backed exposures in the real estate sector and mid-market corporates.

Financial Performance and Provisions

In FY24, Piramal Enterprises reported a loss of Rs 1,684 crore. This loss was primarily due to provisions made towards investments in alternate investment funds. However, Piramal expressed optimism about recovering these provisions, as evidenced by the results for the January-March quarter of FY24.

Piramal also highlighted that their growth business is on track to achieve steady profitability. He assured shareholders that despite past challenges, the company is poised for significant growth and stability in the coming years.

The company's strategic focus on retail loans and careful management of its wholesale business are key drivers for achieving these ambitious targets. The chairman's statements reflect confidence in overcoming past financial hurdles and steering towards a robust future.

Piramal Enterprises' commitment to increasing its AUM and focusing on retail loans indicates a strategic shift aimed at sustainable growth. The company's plans to reduce its legacy wholesale business while expanding its retail portfolio demonstrate a clear direction for future development.

The outlined goals and strategies suggest that Piramal Enterprises is well-positioned to meet its growth objectives and enhance shareholder value. The company's proactive approach in managing its assets and addressing past financial challenges underscores its resilience and forward-looking vision.

Piramal's emphasis on retail loans as a growth driver aligns with broader market trends favouring consumer lending over wholesale financing. This strategic pivot is expected to yield positive results in terms of profitability and asset quality.

The chairman's detailed roadmap provides a clear picture of Piramal Enterprises' future trajectory, focusing on asset growth, profitability, and risk management. This comprehensive strategy aims to solidify the company's position in the non-bank lending sector while ensuring long-term sustainability.

Piramal's optimistic outlook for recovering provisions and achieving steady profitability reflects a strong commitment to financial health and operational excellence. The company's efforts to balance growth with prudent risk management are likely to pay off in the long run.

Overall, Piramal Enterprises' strategic initiatives and growth targets underscore its ambition to become a leading player in the non-bank lending space. The company's focus on expanding its retail loan portfolio while managing legacy assets positions it well for future success.