Piramal Enterprises Reports 64% Decline in Net Profit Amid Regulatory Changes

Piramal Enterprises announced a considerable 64% drop in net profit for the June quarter, amounting to Rs 181 crore, compared to Rs 509 crore in the previous year. The company cited a higher base effect due to a stake sale in Shriram Group last year. Nevertheless, core net interest income saw a positive growth of 18%.

Piramal Enterprises on Tuesday reported a 64 percent decline in its June quarter net profit to Rs 181 crore, impacted because of a higher base due to a one-off item last year.

The Mumbai-based non-bank lender had reported a consolidated net profit of Rs 509 crore in the year-ago period.

Managing director and chief executive Jairam Sridharan attributed last year's performance to a Rs 850 crore benefit from a stake sale in a Shriram Group entity. He added that the performance has been stable during this reporting quarter.

The core net interest income grew 18 percent to Rs 807 crore, driven by a 10 percent increase in the overall assets under management to Rs 70,576 crore. However, the net interest margin narrowed to 6.7 percent from 7.3 percent in the year-ago period.

Sridharan noted that disbursements were impacted in the June quarter due to regulatory changes concerning fair practices, but expressed confidence that the company will meet its FY25 target of 15 percent AUM growth.

Retail AUM grew by 43 percent, though Sridharan mentioned the company would slow down this growth going forward. Other income declined 21 percent to Rs 167 crore during the same period compared to last year.

Under impairment allowances, Piramal Enterprises had a reversal of Rs 399 crore, equally split between recoveries from legacy assets and write-offs from the same pool of loans.

Addressing regulatory concerns, Sridharan highlighted that 10 percent of the overall mortgage book or around Rs 3,400 crore of loans are top-ups on existing lines, making it challenging to track the end uses of such loans for NBFCs.

Despite this, Sridharan mentioned that recent RBI guidelines on harmonization would marginally impact the capital position. The overall capital adequacy ratio stood at 24.4 percent.

The Piramal Enterprises stock closed 0.28 percent down at Rs 985.70 apiece on the BSE on Tuesday, against a 0.87 percent correction on the benchmark.