Jefferies has maintained an ‘Underperform’ rating on Piramal Enterprises and raised its target price to ₹1,000 from an earlier level, implying a 23% downside from the current market price of ₹1,300.
The brokerage noted that the company reported a consolidated profit after tax (PAT) of ₹2.8 billion for Q1FY26, marking a sharp turnaround from a ₹2.7 billion loss in the previous quarter. This beat Jefferies’ estimate of ₹1.6 billion and was aided by a ₹1 billion provisioning release due to a drop in expected credit loss (ECL) cover.
Consolidated assets under management (AUM) grew 22% year-on-year, led primarily by growth in the retail AUM portfolio. Net interest margins (NIMs) rose sequentially but still fell short of expectations. While asset quality in home loans and personal loans remained stable, the management flagged emerging stress in used car loans and open market sourced business loans.
Retail gross non-performing assets (GNPA) rose 17 basis points quarter-on-quarter. Although the drag from the legacy wholesale book is expected to gradually diminish, Jefferies highlighted that the overall return on assets (RoA) is likely to remain subdued—below 1.5%—through FY26–FY27.
Despite the sequential improvement in profitability, the brokerage remains cautious on the sustainability of earnings improvement, citing asset quality pressures and a slow path to RoA normalization.
Disclaimer: The views and investment suggestions expressed in this article are those of the brokerage firm mentioned. These do not represent the views of this publication. Investors are advised to consult their financial advisers before making any investment decisions.
