Motilal Oswal Initiates Coverage on Piramal Finance with a Buy Recommendation
Piramal Finance Reports Strong Q4FY26 Performance
Piramal Finance (Piramal) has announced its fourth-quarter financial results for the fiscal year 2026, showcasing a robust performance. The company's net profit for the quarter stood at approximately INR 5 billion, a significant increase from the previous quarter's net profit of approximately INR 4 billion.
The company's net interest income (NII) in 4QFY26 rose by 46% year-over-year to approximately INR 12.4 billion. Other income for the quarter stood at approximately INR 5.5 billion, a substantial improvement from the previous year's INR 7.7 billion and the previous quarter's INR 2.5 billion.
In a notable development, Piramal agreed to the sale of its entire equity stake of approximately 15% in Shriram Life Insurance for a consideration of approximately INR 6 billion during the fourth quarter. The company has received the said consideration, and a net gain of approximately INR 2.6 billion was recognized in 4QFY26. Additionally, Piramal fully wrote off approximately INR 5.9 billion related to land development charges under investment property, following the cancellation of the original developer's Letter of Intent (LOI) and the failure to appoint an alternate developer within the required timeline.
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Financial Projections
Our research team estimates a total asset under management (AUM) compound annual growth rate (CAGR) of approximately 24%, a CAGR of approximately 25% in retail AUM, and a total profit after tax (PAT) CAGR of 56% over the fiscal years 2026 to 2028. We also forecast a return on assets (RoA) and return on equity (RoE) of 2.6% and 12% respectively in fiscal year 2028.
Investment Recommendation
Based on our analysis, we reiterate our BUY rating on the stock with a target price of INR 2,220, which is based on our estimated sum-of-the-parts valuation for March 2028.
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Comparison of Key Financial Metrics
| Metric | Q4FY26 | Q4FY25 | FY26 | FY25 |
|---|---|---|---|---|
| Net Profit (INR billion) | 5 | 15 | 4.85 | |
| Net Interest Income (INR billion) | 12.4 | |||
| Other Income (INR billion) | 5.5 | 7.7 |
Note: Table data may not reflect the actual data used in the original text. It is a simplified representation of the key financial metrics.
Investor Takeaway
Investors should consider buying Piramal Finance stock due to its positive outlook and growth prospects.
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