Piramal Finance Aims to Double AUM to ₹1.5 Lakh Crore by FY28 Through AI-Driven Growth

Piramal Finance, a leading financial services company, has unveiled an ambitious plan to double its Assets Under Management (AUM) to ₹1.5 lakh crore by the fiscal year 2028. This strategic move, announced in the company's recent investor presentation, outlines a comprehensive approach leveraging artificial intelligence (AI) to drive growth, enhance profitability, and ensure predictability in its operations.

AI-Powered Growth Strategy

The company's growth strategy centers around 'Piramal.ai', an in-house AI system designed to boost various aspects of the business:

1. Sales and Customer Acquisition: Piramal Finance plans to utilize AI for sales contests, channel partner assistance, and customer onboarding processes.

2. Operational Efficiency: The AI system aims to improve the accuracy of loan applications and increase the conversion rate of sanctioned but undisbursed loans.

3. Risk Management: AI tools will be employed for credit assessment, fraud detection, and collections intelligence, potentially leading to better underwriting decisions and reduced non-performing assets.

Financial Targets and Performance

Piramal Finance has set clear financial objectives as part of its growth plan:

• AUM Growth: The company expects to achieve a CAGR of 24-26% in its AUM between FY25 and FY28.
• Profitability: Piramal Finance aims for a Return on AUM (RoAUM) of over 3%, with a target AUM-to-equity ratio of 4.5-5.0x.
• Retail Focus: The company plans to grow its retail lending at a CAGR of 24-26%, with retail now comprising over 60% of its portfolio.

Recent Financial Performance

The company's Q2 results demonstrate progress towards these goals:

• Consolidated AUM: Up 22% year-over-year
• Consolidated PAT: Increased by 101% year-over-year
• Net Interest Income: Rose by 29% to ₹1,132.00 crore

Operational Improvements

Piramal Finance has reported several operational enhancements:

• Cost Efficiency: The company has reduced its operating expense to AUM guidance by 25 basis points.
• Productivity Gains: Significant improvements in sales, credit manager, and operations productivity have been observed.
• Risk Management: The company reports a controlled vintage risk, with 30+ days past due at 6 months on book showing a declining trend.

Strategic Focus Areas

1. Retail Expansion: Piramal Finance is aggressively growing its retail lending business, with a particular focus on secured products and a cautious approach to unsecured lending.

2. Wholesale 2.0: The company is building a diversified and granular wholesale lending book, focusing on real estate and corporate mid-market lending.

3. Legacy Business Management: Piramal Finance aims to reduce its legacy AUM to below ₹35.00 billion by March 2026, as part of its strategy to focus on growth segments.

4. Technology Integration: The company is implementing an agile tech framework integrated with a 'High Tech / High Touch' model across the customer journey.

Challenges and Outlook

While Piramal Finance's growth plans are ambitious, the company will need to navigate potential challenges such as market volatility, regulatory changes, and competition in the financial services sector. The success of its AI-driven strategy will depend on effective implementation and the ability to adapt to changing market conditions.

As Piramal Finance moves forward with its expansion plans, investors and industry observers will be closely watching the company's ability to execute its strategy while maintaining asset quality and profitability in a dynamic financial landscape.