Piramal Enterprises Limited (PEL) has announced plans to finalize its merger with Piramal Finance by Q3 FY26, marking a significant step in simplifying the group's structure. The company also reported robust financial performance for the first quarter of fiscal year 2026, with substantial growth in key metrics.

Strong Q1 FY26 Performance

PEL witnessed impressive growth in Q1 FY26, with consolidated Assets Under Management (AUM) reaching ₹77,572.00 crore, up 22% year-over-year. The retail segment showed particularly strong momentum, with retail AUM growing by 37% year-over-year to ₹69,005.00 crore.

The company's net profit surged by 52% year-over-year to ₹276.00 crore in Q1 FY26, while total income rose by 27% to ₹1,237.00 crore. Net interest income also saw a significant increase of 25% compared to the same quarter last year, reaching ₹1,010.00 crore.

Merger with Piramal Finance

The proposed merger between PEL and its subsidiary Piramal Finance Limited (PFL) is expected to be completed by Q3 FY26. This strategic move aims to simplify the group's structure and provide shareholders with direct access to the entire lending business. The merger has already received approvals from SEBI, RBI, and NCLT, with the final stages of the process underway.

Diversified Lending Portfolio

PEL's lending portfolio continues to show strong diversification across various segments:

Expanding Distribution Network

The company has significantly expanded its distribution network, now serving 26 states through 517 branches. PEL's workforce has grown to approximately 16,400 employees, including a sales team of around 10,300 members.

Asset Quality and Risk Management

PEL has maintained strong asset quality metrics, with overall retail 90+ days past due (DPD) at 0.8% as of June 2025. The company's robust risk management framework has led to superior asset quality, with consolidated Gross Non-Performing Assets (GNPA) at 2.8% and Net Non-Performing Assets (NNPA) at 1.9% as of March 2025.

Technology Integration

The company has been leveraging artificial intelligence and machine learning to enhance its operations. Notable improvements include:

• 80,000 credit memos generated by AI in FY25
• 25% of new codes written using AI in Q4 FY25
• 29% of customer emails addressed end-to-end by AI agents
• 60% of sales managers using Arya, PEL's in-house Gen AI assistant

Future Outlook

PEL is on track to meet its FY26 targets, including:

• 25% year-over-year growth in total AUM
• 30% year-over-year growth in growth AUM
• 80-85% retail share in total AUM
• Reducing legacy AUM to ₹3,000.00-3,500.00 crore
• Achieving consolidated PAT of ₹1,300.00-1,500.00 crore

With its strong financial performance, ongoing merger plans, and focus on technology integration, Piramal Enterprises is well-positioned for continued growth in the Indian financial services sector.

In a significant development for the Piramal Group, the National Company Law Tribunal (NCLT) Mumbai bench has given its approval to the composite scheme of arrangement between Piramal Enterprises Limited (PEL) and Piramal Finance Limited (PFL). This corporate restructuring marks a pivotal moment in the group's strategy to streamline its financial services operations.

Key Highlights of the Merger

• The NCLT Mumbai bench sanctioned the merger on September 10, as per the order uploaded on September 11.
• Piramal Enterprises Limited will amalgamate with Piramal Finance Limited, its wholly-owned subsidiary.
• The appointed date for the merger is set as April 1, 2024.
• A record date of September 23 has been fixed for the issuance and allotment of equity shares of Piramal Finance to PEL shareholders.

Rationale Behind the Merger

The merger is driven by several strategic considerations:

1. Regulatory Compliance: PFL, previously registered as a Housing Finance Company (HFC), has been converted to a Non-Banking Financial Company - Investment and Credit Company (NBFC-ICC) due to not meeting the Principal Business Criteria for HFCs. The merger ensures compliance with RBI regulations that prohibit multiple NBFC-ICCs within the same group.

2. Listing Requirement: As an upper layer NBFC, PFL is required to be listed by September 30, as per RBI's Scale Based Regulations. The merger facilitates this listing requirement.

3. Operational Efficiency: The amalgamation is expected to lead to a seamless transition, given PFL's larger scale of operations and wider geographical presence. PFL accounts for 79.90% of the combined interest income and 77.20% of the assets under management of both entities.

4. Unified Approach: The merger will result in a unified platform for customer interactions and lender engagement, simplifying operations and enhancing service experiences.

5. Financial Consolidation: The creation of a larger consolidated financial services entity is anticipated to deliver an increased range of financial products to a broader customer base, benefiting from economies of scale and operational efficiencies.

Implications for Shareholders and Stakeholders

• Shareholders of Piramal Enterprises Limited will receive equity shares in the merged entity, Piramal Finance Limited.
• The merger is expected to optimize the capital structure and maximize shareholder value.
• All liabilities of PEL will be transferred to PFL, and employees will be transitioned without any break in service.

Regulatory Approvals and Compliance

The merger has received approvals from various regulatory bodies, including:

• Reserve Bank of India (RBI)
• Securities and Exchange Board of India (SEBI)
• BSE Limited and National Stock Exchange of India Limited

The companies have undertaken to comply with all applicable laws and regulations, including those related to accounting standards, stamp duty, and tax obligations.

Management Changes

In a separate announcement, Piramal Enterprises Limited disclosed that Mr. Anand Vardhan, Group General Counsel and part of the Senior Management Personnel, has resigned from the company. His last working day is set for September 29.

As the Piramal Group moves forward with this significant restructuring, the financial services landscape in India watches closely. The merger is poised to create a stronger, more streamlined entity in the non-banking financial sector, potentially setting a precedent for similar consolidations in the industry.