Our significant transformation process and reshaping of business operations gained further momentum in FY 2023-24. Today, we are a leading, diversified NBFC with a presence across Retail Lending, Wholesale Lending, Alternatives and Life Insurance JV. As we continue to optimise our business mix, we work towards creating a stronger, more flexible entity that enhances value for all its stakeholders.
Our Growth Business includes Retail and Wholesale 2.0 lending. Through our Retail Lending business, we offer a wide range of secured and unsecured lending products. Our technology-driven, multi-product platform allows us to meet the diverse financing needs of our customers.
We remained focussed on becoming more retail-oriented by increasing the share of Retail Loans, and simultaneously building a granular Wholesale 2.0 book in a calibrated manner. Through our Wholesale 2.0 business, we provide financing to real estate developers and mid-market corporate players pan-India, with a focus on calibrated, granular and cash-flow backed loans.
50% YoY
101%
51% YoY
Vs 0.4% in FY 2022-23
39%
The secured product segment forms a major part of the AUM and comprises Housing, Loan Against Property (LAP) and other Secured Loans. The AUM also consists of Unsecured Lending products such as Personal Loans, Business Loans, Digital Embedded Finance and Microfinance Loans. Through our Digital Embedded Finance business, we offer personalised financing solutions to retail customers via the digital and tech-based platforms through partnerships with leading Fintech and Consumer tech firms.
With our focus on “Budget Bharat”, we address the credit needs of Bharat’s unserved, underserved and highly under-leveraged segment in the market. Our customer is pivotal to how we engage in business. Unlike banks or NBFCs that look at the capability and paperwork of customers, our approach is to go beyond paperwork and see the person’s intent.
of Retail AUM geographic exposure* is from metro adjacent and Tier 2/3 cities and towns
Self-employed
Salaried
Secured
Unsecured
Female Applicants^
Median Age
Notes: (*) Population considered Tier 1: 40+ lakh, Tier 2: 10-40 lakh, Tier 3: <10 lakh; metro adjacent locations carved out from tier 1/2/3 for centres in peripheries of metros. (^) Including co-applicants
Our typical customer is a self-employed / salaried individual or small business owner, primarily from Tier 2&3 cities and towns, mostly undervalued, unbanked, or not deemed creditworthy, with unmet financial aspirations and needs.
A trait that makes our customers stand out is their incorruptible quality and high ethical standards. Right intent is their biggest source of self-worth and self-respect. However, they are unable to avail credit from traditional financial institutions, as they give loans only to people with solid financial backgrounds and the right paperwork.
“Hum Kaagaz Se Zyaada Neeyat Dekhte Hain” is our maiden and clutter-breaking advertisement campaign that highlights our commitment to look beyond papers and documentation to assess the creditworthiness of our loan-seeking customers. Our brand campaign disseminates a strong and positive message that consumers with the right intent to repay their loan can avail themselves of services from Piramal Enterprises.
We are on our journey to fulfil the visible gap in access to formal credit by catering to the widely different financing needs of aspirational, unserved and under-served MSMEs and micro-enterprises. Today, we have empowered more than 4.1 million borrowers, most of whom are self-employed and new-to-credit, with no formal access to capital and belonging to Tier 2&3 cities and towns in India.
We provide housing loans, loan against property, used car loans, small business loans to our customers, unlocking the latent potential of the under-served markets and enabling formal credit access to financial products in a meaningful manner.
Our multi-dimensional framework and our multi-product technology-backed platform led us to serve the under-served and unserved people of ‘Bharat’. Today, the retail business is contributing 70% to the total AUM, with mortgages contributing 68% to Retail AUM.
Our diverse secured and unsecured lending products are aligned with consumer preferences served through robust delivery systems. Our secured product segment comprises Housing, Loan Against Property and Other Secured Loans, which together form 75% share of our total AUM. The balance 25% share of AUM is unsecured lending offering products like Salaried Personal Loans, Microfinance Loans, Business Loans and Digital Embedded Finance.
Credit Managers in branches
Credit Managers in the Central Processing Unit
PD Visits in FY 2023-24
On-Roll Appraisal Staff
Appraisal Visits in FY 2023-24
Appraisals mandatory where property value > ₹ 50 lacs
Collection Staff
No. of Agencies
Pin Codes covered
Note: (*) Involves process of valuing and appraising the property on-site
As mentioned earlier, the Retail Lending segment offers Housing Loans, Loan Against Property, and other secured and unsecured loans. With AUM of ₹ 32,612 crore and annual disbursements of ₹ 14,820 crore across housing finance and LAP, we are among the leading players in affordable housing finance. With our wide distribution and high-tech + high touch model, we continue to deliver high growth even at this scale.
Having laid the foundation of Wholesale 2.0 in FY2022, we are making rapid progress in scaling up the business. We are building this business in a calibrated manner, while capitalising on market gaps and leveraging our strengths to build granular, cash flow backed and asset-backed Wholesale 2.0 book across multiple sectors and geographies.
Today, the Company is one of the market leaders in real estate financing, focussed on calibrated, granular, and cash-flow-backed loans. The AUM of Wholesale 2.0 stands at ₹ 6,347 crore. The portfolio quality is performing well, in line with or ahead of underwriting, as reflected in the prepayments.
Adapting to market landscape and opportunities, we continue to build our book by providing financing to real estate developers and mid-market corporate players pan-India. We are building a layered book with different risk-return propositions, adhering to boundary conditions and guardrails. We are also concentrating on an analytics-driven underwriting vertical buildout and proactive asset management.
The Legacy Business includes Wholesale 1.0. As part of our business transformation exercise, we continued working on accelerating the rundown of Wholesale 1.0 assets and phasing out the legacy portfolio by focussing on complex recoveries and monetisation of assets.
The AUM of Wholesale 1.0 stands at ₹ 14,572 crore. This was a reduction of 50% in AUM YoY and reduction of 66% since FY 2021-22. The business generated Gross Liquidity of ₹ 10,245 crore in FY 2023-24.
Along with reducing the drag of non-earning assets, a smaller Legacy book, we believe, will also benefit our cost of funds in the medium to long term.
Along with our business transformation journey, we are also progressing towards continuous growth and sustained profitability. With adequate capital firepower support, strong business and leadership teams in place with focussed business models and strategies, all our businesses are set for sustainable and high-quality growth.
We are focussed on balancing our three pillars of growth, risk, and profitability, with customer at the centre. We have bolstered our specialist businesses with strong governance architecture, extraordinary leadership, cutting-edge technology, and diligent risk management.
As we advance in establishing a leading retail-led NBFC, we estimate an AUM growth of 15% for FY 2024-25. Our retail:wholesale mix should further shift to 75:25 ratio. Additionally, enhancing operational efficiency in growth business remains a pivotal objective, with opex to AUM ratio to further moderate to 4.6% by end of FY 2024-25
In the medium term, we expect the momentum in AUM growth to sustain, reaching to ~ ₹ 1.5 lakh crore by FY 2027-28, supported by a robust retail growth of 26% CAGR. Our profitability targets are ROA of 3.0-3.3% by FY 2027-28E.
In addition, assessed carry forward losses of ₹ 10,627 crore, provide an upside potential to ROA & PAT targets.
This year, PEL is proposed to be merged with its subsidiary Piramal Capital & Housing Finance Limited (PCHFL). In run-up to this merger, PCHFL is proposed to be renamed as Piramal Finance Limited^ (PFL) upon receipt of NBFC-ICC licence. PEL is then proposed to be merged with PFL and get listed pursuant to the merger. The merger consideration is in lieu of every 1 equity share of PEL, its shareholders will receive 1 equity share of PFL, and, subject to RBI approval, 1 (one) NCRPS* of ₹ 67 of PFL. The proposed merger is likely to take 9-12 months for completion.
Smooth transition and seamless regulatory compliance
Shareholders to gain direct access to entire lending business
Simplification of group structure
Significantly higher scale, geographic footprint, and sales force vs PEL
Originates almost entire portfolio for both entities
Minimises operational inconvenience associated with transfer of infrastructure and assets
Notes: (^) Subject to requisite approval (*) Non-Convertible, Non-Cumulative, Non-Participating Redeemable Preference Shares
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