Piramal Enterprises on Tuesday announced a 64% year-on-year decline in net profit to Rs 181 crore for the June quarter, primarily due to a higher base from a one-time gain last year. The company’s net profit was bolstered by a gain of Rs 850 crore from a stake sale in a Shriram Group entity.
Total assets under management grew 10% to Rs 70,576 crore, driven by its retail and wholesale business. Net interest income increased 18% to Rs 807 crore in the June quarter while the net interest margin narrowed to 6.7% from 7.3% in the year-ago period.
“The first quarter results show two important trends that highlight our progress and strategy. First, our growth business continues to build on the momentum established over the past two to three years, now representing the majority of our AUM and net profit,” said Ajay Piramal, chairman, Piramal Enterprises in a statement.
“Second, we continue to reduce our legacy discontinued AUM. Notably, in Q1 FY25, the decline of Rs 1,597 crore in legacy AUM had no impact on our profit and loss statement from credit costs,” he said.
The company’s asset quality remains stable across retail and wholesale products, he added.
The assets under management (AUM) under retail rose 43% to Rs 50,350 crore, of which 67% was contributed by the mortgage portfolio that was 37% higher at ₹34,101 crore.
Jairam Sridharan, managing director and chief executive, said in an earnings call that disbursements were impacted in the June quarter due to regulatory changes around fair practices but exuded confidence that the company will be able to meet its FY25 target of 15% AUM growth.
Under impairment allowances, it had a reversal of Rs 399 crore during the quarter on a standalone basis, which Sridharan explained as being equally split due to recoveries from legacy assets and also write-offs from the same pool of loans. He said 10% of its overall mortgage book or around Rs 3,400 crore of loans are top-ups on existing lines and added that it is difficult to track the end uses of such loans, especially for NBFCs. The RBI guidelines on harmonisation released on Monday will have a marginal impact on the capital position, he added.