Piramal Finance Limited (NSE: PEL) Q3 2026 Earnings Call dated Jan. 23, 2026
Corporate Participants:
Unidentified Speaker
Anand Piramal — Executive Director
Jairam Sridharan — Chief Executive Officer of Retail Financing Business
Yesh Nadkarni — Chief Executive Officer of Wholesale Lending
Vikash Singhla — Chief Executive Officer
Analysts:
Unidentified Participant
Avinash Singh — Analyst
Abhijit Tibrewal — Analyst
Kushagra Goyal — Analyst
Prithviraj Patil — Analyst
Harshit Toshniwal — Analyst
Vikram Damani — Analyst
Anusha Raheja — Analyst
Presentation:
operator
The conference is now being recorded. Sa. Sat. Sa. Ladies and gentlemen, you have been Connected to quarter three and nine months FY 2026 earnings conference call of Peramal Finance Limited. The call will begin shortly. Please stay connected. Please note that you have been Connected to Quarter 3 and 9 Months FY 2026 Earnings Conference Call of Piramal Finance Limited. The call will begin shortly. Please stay connected.
operator
Foreign. Ladies and gentlemen, good day and welcome to the quarter three and nine months FY 2026 earnings conference call of Piramal Finance Limited. As a reminder, all participant lines will be in the listen only mode and there will be an opportunity for you to ask questions after the presentation. Conclud should you need assistance during the conference call, please signal an operator by pressing Star then zero on your Touchstone phone. The results material are available on exchanges and the company’s website and you may refer to them during the discussion. Please note that today’s discussion may include certain forward looking statements which may be viewed in conjunction with the risks and uncertainties that the company faces.
These statements are based on management’s current expectations and are subject to uncertainty and changes. On the call today we have with us Mr. Anand Piramal, Executive Chairman Mr. Jayaram Sridharan, MD and CEO Mr. Rupin Zaveri Group President Mr. Yash Nadkarni, CEO Wholesale Lending, Mr. Vikas Singla, CFO and Mr. Ravi Singh, Head of Investor Relations and Strategy. I now hand the conference over to Mr. Anand Piramal for his comments. Thank you. And over to you sir.
Anand Piramal — Executive Director
Good afternoon everyone and thank you for joining us today on this call to discuss our December results. Our company delivered a strong performance in Q3 making it a strong nine month period of FY26 with robust progress across all our important parameters. Total AUM grew by 23% year on year to 96,690 crores. Led by expanding consolidated margins, stable risk and improving operating leverage. Our nine month FY26 console PAT now stands at above thousand crores versus rupees 383 crores in the nine months of FY25. All this is without any major one off gains in the last nine months.
In a crucial development earlier this month we received a double A rating for our long term debt from Crisil. This will be pivotal in our journey of steady scale up of the business and improving profitability. In this context it is also great to see that the pricing of our recent debt raising has been moving substantially lower. We recently announced the monetization of our stake in Sriram life insurance for 600 crores. This transaction is expected to conclude in Q4. We expect further monetization of our other investments in the coming quarters. Overall, there is encouraging consistency building in our numbers over the last several quarters.
We’re confident to meet our near term and medium term growth and profitability targets. With that, I’ll hand it over to Jayram and his team to share more details of the results.
Jairam Sridharan — Chief Executive Officer of Retail Financing Business
Thank you Anand. Good evening everyone. In the third quarter or yeah, in the second quarter of this financial year we had introduced a framework for value creation and long term alignment with our shareholders. We have continued with the same framework this quarter. To refresh your mind, the framework are three drivers we believe for value creation for Piramal Growth, profitability and predictability. And supporting all these value drivers is our attempt to build a future proof AI native company. Let me start my comments with an evaluation of our third quarter performance against this very framework. Starting with growth.
If you look at slide number four in our presentation, AUM was up 34% year on year in our growth book. On a consolidated basis, AUM growth further improved to 23% year on year and is well on track to end the year over 1 lakh crores and end the year FY28 at over 1.5 lakh crores. As we have mentioned in our medium term plans, the second vector of value creation is profitability which is covered on the next slide. Slide number 5 return on Aum of our growth business increased further to 1.9% in the third quarter compared to 1.7% in the second quarter and 1.3% in the third quarter of the last financial year.
Leverage ie AUM by equity also continues to increase and is now at 3.5 at the end of the third quarter compared to 2.9 in the same quarter last year. We continue to progress steadily towards our goal of 4.5 to 5x on leverage and of course 3% on profitability which I will come to next. The third vector in our value creation I’d like you to look at the next slide, slide number six and we’ll also refer a little bit to slide number 34. In the third quarter growth business delivered a profit before taxes of 427 crores.
Jairam Sridharan — Chief Executive Officer of Retail Financing Business
Keeping up the steady and predictable trajectory of the last eight quarters, the nine month growth business PVT has now crossed 1000 crores. With that our nine month consolpat also stands at 1004 crores without any major one off gains in these nine months. The stability and predictability are Also visible in our credit risk outcomes with 90 day delinquencies stable quarter on quarter and credit costs down 10 basis points quarter on quarter. Let’s now go one level deeper into our business performance metrics starting with Growth Aum growth in our retail business remains very strong. We ended the third quarter with a retail AUM growth of 34% year on year.
Our mortgage business comprising housing loans and lap grew by 35% year on year to 53,958 crores. Mortgages account for 56% of the total AUM of the company and 68% of retail AUM. Retail AUM growth was well diversified across our six product categories, each one of them growing from between 20% to 60% year on year. Wholesale 2.0 AUM was up 35% year on year in the third quarter with both real estate and mid market lending showing year on year growth trends which were very strong and around the 34% mark. Growth AUM was thus overall up 34% year on year to 91,460 crores.
Disbursements in retail were up 26% year on year to 10,498 crores. This was however flat versus our performance in the second quarter. If you notice on slide number 15 you will see a similar flattening of disbursement trajectory in Q3 last year as well. This is driven by an internal process driven cyclicality and not as much the market environment this year. We have also kept pricing on all retail products quite firm in the third quarter versus the second quarter. As you will notice in product level pricing charts. In the face of a tightening competitive environment on rates, this has had a little bit of an impact as well.
Jairam Sridharan — Chief Executive Officer of Retail Financing Business
However, demand in retail remains very strong and you should expect healthy growth in retail disbursements in Q4 in line with the growth trajectory that you saw last year. As shown on slide number 19, our retail customer franchise grew by 22% year on year to 5.4 million. Our sourcing from cross sell in unsecured disbursements remains in the 25 to 30% range and we hope to materially improve this in the coming years. As shown on the same slide, our cross sell portfolio comes right now with significantly lower OPEX and significantly lower credit costs compared to the open market business.
We have consciously not expanded our branch network in the last six quarters. This is now likely to change. In Q4 we plan to take up a little bit of branch opening again. We expect to open a total of approximately 100 branches in Q4. Of these, about 25 are expected to be full service branches, 25 new gold loan branches and about 50 microfinance branches. The two major white spaces in retail that we have been speaking about for the last few quarters, Microfinance and Gold will thus see us making meaningful steps forward in this coming quarter. So that was on growth moving on to margins on a consoled basis.
Margins have continued to expand and are up 51 basis points year on year to 6.3% growth. Business margins were stable quarter on quarter Cost of Borrowing Moderation was gradual in the third quarter as we saw no NCLR cuts at banks. We have so far experienced a transmission of about 25 basis points in into our cost of borrowing in this rate cut cycle. We expect a further approximately 25 basis points in the months ahead. We are also actively working on our borrowing mix, taking up lower cost borrowing sources. Opportunistically, we recently announced our inaugural $350 million long term DFI funding from IFC and ADB.
Jairam Sridharan — Chief Executive Officer of Retail Financing Business
The total multilateral fundraising pipeline is is up to $500 million in this financial year. This quarter saw a big company level event that Anand referred to earlier, the upgrade by crisil to AA credit rating. This we believe has the potential to lower our cost of borrowing by 50 to 80 basis points once we churn our current borrowing stack out and replace it with new borrowing. The AA rating also offers us access to certain parts of the lending market that we could not access before, thus enhancing our ability to continue delivering industry leading AUM growth. It can also aid expansion of RO AUM and also potentially allows us to lever our balance sheet a little bit higher to lift steady state ROEs by 3 to 4 percentage points.
On the income side, as shown on slide 21, the yield on retail AUM was broadly stable at 13.2%. The reported fee which was impacted by the processing fee amortization back in the first quarter of financial year 25 is consistently normalizing exactly as we guided and is led by stable underlying fee collection. This story has probably two more quarters to play out and it should start becoming steady around that point. On retail opex this continues to be one of the big stories in the company. The OPEX to AUM further came down by 10 basis points quarter on quarter to 3.8% in Q3.
You will see this on slide number 21. We did see a cost impact of about 35 crores at the company level due to the new labor code, but OPEX ratios are able to absorb that impact and still retain their downward trajectory. We have now consistently reduced our OPEX to AUM ratio for three years. Branch and employee productivities have improved materially in this period leading to the stark improvement in OPEX efficiency that you see. As mentioned earlier, in the fourth quarter we are looking to restart our branch expansion. However, we expect continued productivity gains for our employees and our branches and with that we are confident to keep taking retail OPEX to AUM ratio down towards our target of 3.25 to 3.75%.
Jairam Sridharan — Chief Executive Officer of Retail Financing Business
So the growth in branches is not going to impact the downward trajectory of OPEX to AUM in any material way. Tech and AI have been key enablers of our growth and productivity enhancement. On slide 7 you see that in the third quarter our focus of AI efforts was on collections. We saw a lot of AI use cases in our collections app which is homegrown. We had optimization of allocation channels for resolution using reinforcement learning techniques, use of speech to text to make collections dispositions richer and real time AI collection bots have now started matching human collectors performance.
This means that we can now roll out AI plus human call centers to maximize resolutions. And then you also saw an implementation and expansion of our self cured models across both secured and unsecured businesses. So it’s been another very busy quarter in terms of AI AI assets being rolled out across the company Coming to Risk the risk performance of the company was solid with flat GNPA and growth business credit cost coming down by 10bps. QoQ retail is 87% of our growth AUM and risk performance in this segment has been an industry focal point over the last six to seven quarters.
If you go to slide number 22 you will see that for Piramal 90 plus DPD in retail at 0.8% remains within the narrow range that we have maintained consistently over the last three and a half years. Some observations to be made on retail credit risk in the third quarter. Unsecured portfolio is showing steady improvement with delinquency down from third quarter FY25 peak to now the lowest levels. In the last five quarters all products in unsecured have shown improvement with segments like Microfinance now nearing long term lows in their portfolio. Risk within secured used car loans showed an uptick in delinquencies in the first half of this financial year.
Jairam Sridharan — Chief Executive Officer of Retail Financing Business
Recent originations however suggest stabilization of this risk. Quality of recent originations are sharply better and should result in t he 90 rate going down the lapse segment. We have been talking about it for the last couple of quarters. This segment has witnessed a gradual creep up in risk. Even though in absolute terms risk still remains quite low. It needs monitoring of certain subsegments such as low tickets, high leverage customers and some marginal industry segments. We have been taking preventative actions to safeguard our portfolio now for the last six months. Risk in the home loan segment remains solid and low with very stable delinquencies.
Putting this all together, credit cost of the growth business as I mentioned before was down 10 basis points QoQ to 1.6% before I step off the retail commentary, I’d like to share some people news with you. Jagdeep Malaredy, the CEO of our retail business and Sunit Madan COO have decided to explore new opportunities outside Firama. Jagdeep and Sunit’s leadership helped create a strong foundation for our growth and I wish them success in their next career stints. They will remain with us till March end to allow smooth transitions. We have had a very strong leadership pipeline over the last few years and leveraging that we have already announced elevation of the next set of leaders from inside our system.
I am happy to announce that Imtiaz Ahmed will take over as our Chief Business Officer and Vikas Arora will take over as our COO effective April 1st. Imtiaz and Vikas will lead our retail teams as we enter the next phase of our evolution and we wish them the very best. Finally, let me come back to the overall company if I could point you to slide number 12. At the start of the year we had shared five targets and goals for the company for financial year 26. These were around AUM growth, different metrics on business mix and a specific guidance on total consolidated pad.
With our strong performance in nine months of FY26, we remain very confident to meet all of these targets. With this I hand over the call to Yash to discuss our wholesale business. Yash Thanks a lot Jairam and hello everyone.
Yesh Nadkarni — Chief Executive Officer of Wholesale Lending
Our Wholesale 2.0 business continues to scale up steadily across real estate and corporate mid market lending segments. As Jairam earlier alluded to, as of December 2025 our 2.0 AEM stood at 12,047 crore reflecting a 35% year on year growth. Real Estate book contributed about 74% of this while CMML occupy 26% share of the AM. Since the inception of 2.0 in FY22 we have disbursed a cumulative sum of little over 22,700 crore across 341 loans. Currently the portfolio comprises 158 real estate loans with an AEM of 8891 crores and 64 CMM loans with AEM of 3150.
During the third quarter we disbursed 2166 crores. Our average origination per loan was 75 crores while our average disbursement per loan was 28 crore. This granular portfolio continues to demonstrate healthy economics with average ticket of 54 crore and a stable effective interest rate of 14.5. I’m glad to note that despite a declining interest rate environment we have been able to protect yields and nims. We continue to see a healthy disbursement pipeline across both real estate and CMNO. At the same time, repayments remain elevated at 66% of disbursements during the quarter which moderated net EM group.
This trend has been consistent over recent quarters and reflects strong portfolio performance ahead of our underwriting and robust asset quality. From a macro standpoint, we continue to see strong tailwinds across real estate and corporate mid market segments. Home sales continue to be strong, corporate balance sheets are much cleaner now and are well capitalized. While competition remains strong for our business, we believe that we will continue to see strong take up for our loans across the segments in which we operate. We will continue to grow this book in a thoughtful and calibrated manner. The Coming Quarters as far as our legacy 1.0 wholesale business goals, we continue to remain focused on achieving our guidance of getting to a size of 3 to 3500 crore by March from the current level of 5230 crore which is already below 5% of total AUM today.
That brings me to the end of the wholesale section and I would now request Vikash to take over to discuss financials.
Vikash Singhla — Chief Executive Officer
Moving to our financial performance in Q3FY26 we reported consolidated net profit of 401 crore as against Q3 of FY25 net profit of 39 crore for Forma PBT4 growth business stood at 427 crore growth of 101% year on year over PBT of 212 crore in Q3 of FY25 growth business OPEC grew by 11% year on year versus income growth of 30% year on year. This included 35 crore impact due to new labor code. Operating profit thus grew by 55% year on year to 775 crore in Q3FY26 we reported growth business credit cost of 1.6% versus 1.7% in Q2FY26 there was a tax writeback of 73 crore in Q3 which is led by cash income tax refunds.
Our total GNPA and NNPA ratios stand at 2.6% and 1.9% respectively. Our net worth stands at 27,872 crore with capture adequacy at 20.3% versus 20.7% in previous quarter. With these remarks I would now like to open the floor for questions. Thank you.
Questions and Answers:
operator
Thank you very much sir. Ladies and gentlemen, we will now begin with a question and answer session. Anyone who wishes to ask questions may please press Star and one on the touchtone phone. If you wish to withdraw yourself from the question kick you may press star and 2. Participants are requested to use only answers while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. You may please press Star and one to ask questions at this time. The first question is from the line of Avinash Singh from MK Global Financial Services Ltd.
Please go ahead.
Avinash Singh
Yeah. Hi, good evening. Thanks for the opportunity. A few questions Jaram. If I Look at slide 17, the salaried personal loan and digital. Wanted the.
Avinash Singh
More color here on salaried side. If I see the average ticket size of 4 and half lakh and a disbursement yields nearly 17 and a half percent. So what kind of a sort of salad customer these are and what kind of kind of you know that okay, how the sourcing is being here that kind of a yield and are the yields for both salad and digital net to you or it is the kind of yield to customer. I mean is it kind of netted for that intermediary cost or it’s like a gross yield and why sort of you know the digital yields are lower here and then your salary.
So that’s question one. Second question more again on the medium term perspective. I mean very very I would say confident guidance on growth and profitability being reaffirmed again now if I were to look at the kind of you know that market I would say the retail and SME. I mean a number of your peers are now getting a lot of capital and some of the banks, mid sized bank also who operate in this segment and now do you see kind of you know that excess capital now changing the same growth pool leading to some kind of a compression in names.
So jump into question. Thanks.
Anand Piramal
Thanks Avinash for your questions. Both really good questions. Firstly let me explain what PL is in our context and how it differs from digital loans. PL is for us definitionally branch originated business. So it’s Personal loans to salaried individuals and the whole thing is originated in the branch. Digital loans could be both salaried and self employed customers. They are originated digitally. The yields that you see here are all yields to us. These are not yield to customer. The yield to us and yield to customer are pretty much the same in branch PM so that makes no difference.
So the 17 we get is the 17 the customer pays. In digital, however it is different. The yield to customer is actually much higher than what you see here. What we show here is the yield to us net of what we pay off to our originating partners. The reason this number is smaller at 14.5 odd percent compared to the peer is that on the right hand side in the digital loans we are working right now almost exclusively in an fldg construction. So 95% roughly of our originations right now are FLDG backed, which essentially means that our credit cost is near zero.
And of course all acquisition costs belong to the originating partner as well. So the economics to us are actually very comparable between the two. In fact one could argue that it’s slightly better in digital, but the economics are very comparable between the two even though digital shows up as slightly lower yields. To your point on are such yields sustainable? You and I both know what has happened to the rate environment in the last nine months. It has been tight. You are seeing a lot of single digit interest rates being offered for personal loans through top tier employees.
Unidentified Speaker
In the TL world we have held on to 17/ percent through this entire period. Will we be able to maintain 17 percent in Q4? It is not obvious to me. Right. It is possible that in Q4 that number falls a little bit, but it is unlikely to do too much. So I wouldn’t worry about it too much on the margin. Something will change, but it’s generally a Q4 effect. I don’t think anything structural has happened in that market. Moving on to your second question on growth targets and the fact that we have continued to reiterate our 25% AUM growth goal for the year, we feel very confident of our ability to get there.
As you have seen, now nine months are gone. Our growth book is growing at roughly 35% and growth book is now 95% of our entire book. So if the 95% of your book is growing at 35, achieving 25 doesn’t seem like a really big ask. And since it’s AUM we are talking about, most of that is already in the back. So we are not betting on any big huge thing happening in Q4 for us to actually achieve that goal. So I will continue to reiterate that 25% is something that we will achieve at the end of the year as guided at the beginning of the year.
You have a question on whether excess capital is going to make this segment overheated or there is a margin compression possibility. See, in general we are seeing a declining rate environment and declining rate environment. Margins do compress. We have not seen enough of that margin compression yet. RBI has cut rates by what, 125 basis points. We have not seen much margin compression at all so far. So it’s already surprising that we have not seen margin compression. If there is a little bit more that happens from here on in terms of RBI LED rate cut, yes, you should expect to see a bit of margin compression, but that’s cyclical, not structural.
I hope that was good. Let’s move to the next question.
Avinash Singh
Yeah, one more justification. What sort of. If I see, I mean of course your branch opening plans around gold and all. So you’re one of. I mean the two areas where you have been kind of open to inorganic gold and microfinance. Is that inorganic option still? I mean you are on kind of a lookout for these opportunities or right now kind of. It is more that you have decided both to build kind of organically in house.
Anand Piramal
Yeah, yeah. You know, thanks for that question, Avinash. It’s a good one. Let me first a small errata. As I was speaking, Vikas and Imtiaz messaged me offline. I think I misspoke a little bit with respect to the 100 branches. So let me correct what I said before. 100 branches in Q4 the mix is 25 of them full service, 20 gold and 55 microfinance. I think it’s a slight modification to what I said before. Imtiaz and Vikas tell me that this is what they are going after in Q4. So slight modification there. But yes, we are opening branches, yes, we are interested in gold and micro finance and yes, we do remain interested in organic as well.
Good deals will come when they come. And you know what, our multiples are on our stock and gold companies are at a very different place right now. So it might or might not be realistic for one to actually think about an acquisition at an appropriate price right now. But as an institution, Piramal has always had a DNA for M and A and has done it very successfully over the years. We continue to remain open in these two areas for any good interesting opportunities. Nothing very specific to report though. Like there is, there’s nothing, there’s no transaction that I, that I need to talk about right now.
Avinash Singh
Got it, Got it. Very good. Thank you.
operator
Thank you. The next question is from the line of Abhijit from Motilal Oswal. Please go ahead.
Abhijit Tibrewal
Yeah. Good evening and thank you for taking my questions. Congratulations on a good quarter. Jaram sir, first things first, I mean it could just help us understand, I mean how does our mortgage book behave now? Why I asked as this is very often when we track monoline lenders in mortgages they do talk about some PLR changes that are being passed on given that they have seen some benefit in their cost of movings. And like you also mentioned earlier in your opening remarks that we have also benefited maybe 40, 50 basis points out of the 125 basis points repo rate conduct has happened.
Have we made any PLR changes in our mortgage book this rate cut cycle? And I mean if yes, if not, what are your thoughts on this mortgage book going forward?
Anand Piramal
So it’s a good question. Thank you Abhijit for that. See the way our book works is that plr, we have one PLR across all products. So we have a retail PLR and we have a wholesale PLR. So those are the two PLRs that we publish going forward. Have you made that public yet or going forward thing? Not yet, no, not yet. Okay. All right. So we have two PLRs that are published retail and wholesale PLRs. So retail PLR is applicable for all product categories in retail. Whatever is variable rate linked. Everything is linked to that.
Its direct linkages to overall cost of borrowing. As I said and as you can see in our presentation, our cost of borrowing has fallen by about 24, 25 bids so far in this rate cut cycle. We have not cut PLRs yet. So PLRs remain where they are. The overall benefit to us has not been enough for us to actually do a cut yet. My expectation is that there will probably be if the trends continue and if we do get further enhancements in our cost of borrowing and we continue to get more pass through on mclr cuts from banks, you might see us do something in the first quarter of the next financial year.
But so far we have not cut PLRs yet and we do not have repo linked lending unlike the banks etc. So we don’t see any direct pass through of repo rate cuts because obviously we don’t borrow in the repo market.
Abhijit Tibrewal
Got it. And to that end we are not even seeing any elevated out pressure because you’ve not really cut PLRs. I mean even that is holding up well.
Anand Piramal
It’s holding up really well. It surprised me a bit to be honest. One would have expected that we would see a little bit more, you know, BT out, but we have not seen, has held actually quite steady at sub 10% levels.
Abhijit Tibrewal
And then a related question here. You said we Benefited by about 24, 25 basis points in this rate cut cycle and the fact that we got a new credit rating of wf, I mean is my understanding correct? We need one more AA credit rating for many of the credit rating agencies for us to really start benefiting on our cost of borrowings.
Anand Piramal
You’re correct. You’re correct. So we are now rated by three rating agencies. Two of the ones that we had originally, which is IQRA and care, who currently have us at aa, and the new one, Crysil, that now has it at aa. We are speaking with all the other rating agencies in light of what happened with Crisil and I hope to have something to share with you in the next few weeks.
Abhijit Tibrewal
Got it. And then sir, I mean LAP used cars, you already gave out something, some color on your opening remarks. So if you could add some nuances to that. Basically these are the two products that you’ve highlighted in the past as well have shown some, I mean while LAP growth has been very strong across the industry, but at the same time there is some anxiety around. Can LAP be the next product to exhibit some stress? Because I strongly feel, except maybe prime home loans, LAP and Wool, practically every other retail asset class has shown something other over the last two, three years.
Anand Piramal
Yeah, yeah. So see on lap, this quarter gave us less reason to be anxious than the previous quarter. You saw me talk a lot about it in the previous quarter because if you look at our page 22 which shows our risk trajectory over the last three, three and a half years, you will see what has been happening to lab, that very, very slow and steady creep upwards in risk that has been happening. But this quarter you will see that that creep didn’t happen too much. It almost kind of flattened out a tad. So I don’t know whether it’s the beginning of something or what, but we didn’t see much more.
We didn’t see any improvements or anything if we not raise too many hopes there. But yes, this quarter was just a tad better than the previous quarter. Having said that, the low end of lap, it continues to struggle less than 10 lakh. Lap is pretty much dead in terms of risk performance. It’s in really bad shape. So I don’t think that’s coming back anytime soon, but larger laps are still holding up and right now larger the better. So last ticket is actually doing really nicely on used cars. The last two quarters have been kind of raising the alarm bell a little bit on what’s happening here and how risk has really kind of ratcheted up.
But this quarter was a little bit of an improvement. It kind of came down just a little bit. Nothing to celebrate yet. But when I see the horizontals, if you go to the next page, page 23, if you see on page 23 the horizontals, you will see that the vintage risk just started coming down in the second half of last year which means that it will flow through in better risk in the future. So small signs that the auto business after having had somewhat poor credit risk in the first half of the year is starting to actually get a little bit better.
Abhijit Tibrewal
Got it. And sir, did you just mention that Micro Lab still small ticket lap still continues to do very bad because you have shared the same thing in the last quarter as well. And we saw last quarter we have.
Anand Piramal
Exited that market for now, so we’ll have to see. So yeah, no, that business there is no good news to report.
Abhijit Tibrewal
Got it. And gold loans, which all geographies are we going to target first?
Anand Piramal
I don’t want to talk about it yet. We have a marketing plan and I want to be ready from a PR perspective, etc. We are going to two states. I will tell you that we are starting in exactly two states but I don’t want to talk about it yet till we are ready with our local marketing plans etc. And then you will hear it from us in the next few weeks. Vikas who is on the call is personally driving that under his leadership we feel very good about our ability to go live. I know I have been talking about gold for a few quarters and it has been a bit delayed in terms of launch but this quarter we’ll get it done.
Abhijit Tibrewal
Got it. And sir, I just want to squeeze in one last question because this has been coming from investors for maybe last week or so. Just trying to understand, I mean first things first, congratulations to Imtiaz and Vikas for taking over as CBO and CEO respectively. But with regards to Jagdeep and Sundeet Madan, I mean did we try to understand whether they’re going to appear or they’re trying to restart something of their own?
Anand Piramal
We know exactly where they are going but it’s up to them to tell you and their new employer to tell you. You will know soon enough, man. It’s. It’ll be very public very soon. So it’s not, it’s not our place to talk about it. You know, you’ll see it. You’ll see it. And we wish them well, they go into a good place. It’s. It’ll all be good and you will all know it very soon.
Abhijit Tibrewal
Sure, sir. This is useful. Thank you for patiently answering on this questions and I wish you, your team together.
Anand Piramal
Thank you. Abhijit.
operator
A reminder to all the participants that you may please press star and one to ask questions. The next question is from the line of Kushagra Goyal from clsa. Please go ahead.
Kushagra Goyal
Hi. Thank you for taking my question. So just two questions. One was I wanted to understand this internal process seasonality which you mentioned in your opening remarks. How should we think about it? Yeah. On the tenure of the wholesale 2.2 portfolio. So that seems to be coming down. How can that. What’s the impact there? Is it just driven by the prepayments or how is that happening? So yeah, those are my two.
Anand Piramal
Okay. On the first one, I’m not going to give a lot of detail on this. Pardon me. On this. It’s a little bit of a secret sauce of ours. There is something we like to do in the first half of the year which we have been doing for the last two years with great success and that’s front loading a little bit of our. Little bit of our growth in the year and is helping us from a profitability perspective for the full year. It is something a little bit different than what a lot of our peers do.
I don’t want to share, share too many details on it honestly. But suffice to say that it is a choice that we make internally on how we run our business and it has worked really well for us and I would like to continue that in the future. So it’s a very conscious thing. On tenor you want to speak?
Kushagra Goyal
Well, the reduction in tenor is mainly driven by repayments. Right. If you can actually look at Data on page 25, about 66% of what we are dispersing is getting repaid. Right. Quarter on quarter. That really is how it’s working. But having said that, I think as we grow the book from here, I think we will soon see that number stabilize and probably go up. Okay. One more question. If I can just squeeze in. Carry on. Sure. Yeah, sure.
Kushagra Goyal
So regarding your profitability guidance, right now I believe in nine months we have already reached 960 odd crore. So in fourth quarter we are also going to get some one off gains. So how is, how are you thinking about that?
Anand Piramal
Okay, so see our kartal level, we are at a little over 1000 crores, about 1004 crores I think in this, you know, nine months and 1066 crores at the growth level. So yes, we have come a very long way already. And your point is absolutely right. Our significant one off gain that we have mentioned in the past is slated to come in Q4 as well. Our intent, we are not changing our guidance on profits. We’ll retain it as it is. You do see that we still have about 5200 crores of legacy book. You know, any incremental gains we have if we want to, if we need to take some action to set off against, you know, future impairments on the Legacy Book, etc.
We might end up kind of using on that. Our intent is going to be to strengthen the balance sheet as opposed to to taking a lot more into P and L. Let me just leave it at that. Baaki Samasdar. Go. Shara Ghafi.
Kushagra Goyal
Sure, sure. Thank you.
operator
Thank you. We’ll take the next question from the line of Prithviraj Patil from Investec. Please go ahead.
Prithviraj Patil
Thanks for the opportunity. Thanks for the opportunity. So I just had one question. I see the GS, the stage GS1G to GST disclosures and I see that the legacy assets in the retail book has slipped into GS2. I just wanted to know what’s the reason behind that and is there anything to look through the numbers?
Anand Piramal
Samjani question. Sorry, what are you. Which slide? Just tell me a little bit about which slide you’re looking at.
Prithviraj Patil
No. So I looked at the stage one disclosures that are given and I just calculated the GS2 numbers for the legacy assets. So it appears that the stage two has increased in the legacy book and the retail book. Just wanted to know.
Anand Piramal
Actually growth assets was 1525. Stage two, it has come down to 1503. So it’s kind of stable. It’s not, if anything it has come down a tad as far as the legacy is concerned. It was 150 bucks, now it is 200 bucks. There’s nothing there. There’s nothing to report. Let me just say there is no meaningful event here. There’ll be some small sum accounts go here and there, but there’s really nothing to report. It’s fine.
Prithviraj Patil
Okay. This was there in the data book that was shared.
Anand Piramal
Yeah. Ravi and his team will connect with you offline and let’s just make sure that we that we square off the numbers.
Prithviraj Patil
Thanks.
Anand Piramal
Thank you.
operator
Thank you. Before we take the next question a reminder to all the participants that you may please press star and one to ask questions. The next question is from the line of Harshit Toshnival from Premji Invest. Please go ahead.
Anand Piramal
Hi Harshit.
Harshit Toshniwal
Thanks for the result and actually I had two questions. One was a bit related to the last one itself that as you pointed out actually stage two has reduced but stage three in the retail has seen some uptick from 1.8 to 2% sequentially. So if you can throw some color that more on the recovery aspect of it that is it a particular asset category or asset class where you have seen recovery to be slightly tricky and which is why that has fallen. And the second was one on the management transition itself. So our understanding was that we see for the current setup Jagdeep and Sumit had a very relevant role in terms of the sales reporting and one on for the credit and everything operation.
Now just want to get a sense that in terms of the bandwidth, in terms of capability, in terms of how you want to shuffle the roles, how should we expect as investors specifically from the management stability point of view?
Anand Piramal
Sure, sure. I’ll come to that. Let me take your first question on what’s happening to stage I actually don’t There is nothing happening in stage two stage three that the delinquency numbers are the best numbers to look at if you’re looking for stage three because in retail stage three and delinquency are pretty much the same number except the delinquency numbers cut off at 179 whereas Gross Stage 3 continues on till infinity. So if you’re looking for recent trends on what is happening in terms of new additions to bad book delinquency is a better metric than stage three because stage three will just keep retaining really old books in its numerator.
And as you can see in the delinquency, delinquency rates at a portfolio level have been very very stable. So nothing really has happened. LGD if anything has improved except in auto where it has fallen a little bit but in every other business LGD has remained the same or improved and PD numbers anyway are there in the delinquency numbers as you can see they are very very stable. So there is nothing really going on. The way to think about stage 2 and stage 3 etc in retail is that asset classification is formulaic in retail. Nobody is sitting and thinking about whether to classify this asset as a Stage one or two or three, everything is in the system.
Anand Piramal
It’s a pure formula based on days past due and automatically accounts get classified as such. And similarly the provisions also just happen automatically by the system. So there is no judgment involved in any of that. And for you to get a sense of what the risk is in the stock that is open in the balance sheet, the delinquency metrics I would argue are the best metric and that’s why we show them. It’s such a long kind of duration timeline to give you a little bit of a sense of what’s going on there. And while one or two businesses keep going up and down every quarter on an overall basis, there has been a lot of stability and that’s what you should take away that there is a lot of stability in the overall risk level on your management structure point.
Yes. The way we were structured is that Jagdeep was responsible for the revenue side of things and growth side of things and Sunit was responsible for the control side of things. That is exactly the structure that we are continuing. So Imtiaz is responsible for the growth side of things and Vikas is responsible for the control side and so nothing should change. They are both very familiar with the way these roles operate and how we have run our business over the last six years and coming as insiders to the system, there is absolutely no ramp up time there and they do have two and a half months of full transition.
So I expect zero dislocation as investors. You shouldn’t worry about it at all and you will get to meet the new leadership team as and when we catch up. There is no reason for you to feel like there will be any disruption of any.
Prithviraj Patil
Got it. And one last thing if I missed you is that while I think we have performed exceptionally well on the cost from where we were two years back, but if I look at our business construct which is 60, 65% secured portfolio home loan lab primarily and even when I look at probably the kind of yields that it can generate because of its business construct itself, even when I look at our long term cost to upset guidance of 3.2 to 3.7, I actually am trying to sense that it will still be higher than probably what our 6040 for home loan lab versus other product business mix will be able to gather.
So just want to understand that on cost to assets I think what is internally because obviously we have come across long way but still we are at a base where there remains a reasonable amount of scope for improving that in the dupont. So Want to get your sense?
Anand Piramal
Yep. Yep. So my boss is sitting right in front of me and he really wants to jump in and answer this question, but I really don’t want him to. Yeah. Anand is saying you’re sounding like him. So this is exactly what he tells me all the time. So, yeah, no, see, there is, there is, there is. There’s some merit to what you’re saying. Here’s the way we’ve approached this. We have looked at a peer group of affordable housing players, of auto financiers, of unsecured lending financiers, and created a group. And based on that, we have done our benchmarking.
Our understanding is that doing the weight average between these three businesses in the way they are set up in our book, we get to basically 3.22% for us to get to the 75th percentile on cost, cost to assets. That’s our analysis of the entire sector right now. And that’s the reason why we have set up this 325 to 375 range. But as you’ve seen in the last three years, basically every quarter we have brought down OPEX to assets. We will continue to push that. We will see where we get to. I know as owners, it is absolutely your right to expect the best from us and to push us.
And I fully take that on board. And we will continue to push ourselves and do well. Right now I’m benchmarking to about the 75th percentile, which gets us to about 320. Right. So we’ll see where we end up.
Harshit Toshniwal
Perfect. Thanks a lot.
Anand Piramal
Well, no thanks to you for setting a target for me. All right, let’s move on.
operator
Thank you. We’ll take the next question from the line of Vikram Damani from Damani family office. Please go ahead.
Vikram Damani
Hi, good evening.
Anand Piramal
I’m audible. Yes, you are. And Rupin is right here in the room. I’m just saying. Okay, I’ll just jump right into it. On slide 15. I see that your retail disbursements have slowed down, I think 500 crore, quarter on quarter. Anything you want to call out competitiveness? Nothing, Nothing, Nothing. It’ll all come back. Don’t worry about it. It’ll come back. You will see the kind of growth you saw in Q3 to Q4 last year. You will see a similar kind of growth in Q3 to Q4 this year.
Vikram Damani
That’s the only one that was left for you. Thank you.
Anand Piramal
Have a good one. Thank you, Vikram.
operator
Thank you. We’ll take the next question from the line of anusha Raheja from Dalal and Roja. Please go ahead.
Anusha Raheja
Yeah, thanks for taking my question and congratulations on great set of numbers. So on the DFHL assets that we had acquired, so how much is the principal or the interest amount that we are supposed to pay? Say for example, any calculation there for the next two to three years.
Anand Piramal
See DHFL assets are now fully integrated into our overall AUM book. So we are not doing any separation on that. From the original book. We have about what, 7000 crores left. About 7000 crores in our AUM comes from DHFL. Everything else is now pull originated.
Anusha Raheja
No, my question pertains to, you know.
Anand Piramal
Okay, sorry, sorry. Yeah, so basically the liability side we took on about 19,000 crores was our original issuance. What is left right now is about 14,000, 15,000 crores is left. We will keep repaying in tranches. I think the first big tranche comes due next year where big principal repayments are coming. It is carried on our book at about 725 effective yield. So it will start going off in small tranches starting next year. And at 725. Since our incremental right now, as Anand mentioned in his opening remarks is kind of right now already kind of around the eight mark and with a little bit of rating improvement, it will hopefully get a little bit better.
So our replacement cost is going to be something similar. So it’s going to have no meaningful effect on our overall cost of borrowing. Is our expectation.
Anusha Raheja
To pay those borrowings, are you going to raise it or it’s going to be get funded by the existing borrowing. So will that result in increase in the CD ratio?
Anand Piramal
I mean no, no, we will not raise CP to, you know, this is long term borrowing. So we will not raise cp. We will do NCDS to borrow, borrow against this. My expectation is we should be by that by the time this comes due we should be able to raise NCDS at roughly this price. So replacement, replacement will not be meaningful. Negative. So you shouldn’t, you shouldn’t consider this as a big material event. There will be some impact, some small impact, but we should be able to absorb it in our overall cost of borrowing given our recent ratings action.
Anusha Raheja
Okay. And just one last thing. So the calculation that we, you know, you know that the workings that we are working on that part of around 3,3000 odd crore and 4,500 odd crore by FY28. So this bakes in this NCD payment as well, right?
Anand Piramal
Yes. Yes.
Anusha Raheja
Okay. Okay, fine. Thank you so much.
operator
Thank you. Thank You. The next question is from the line of Vikram. The money from the Mani family office, please go ahead. Hi, it’s me again. Sorry, just wanted to check one more thing. What’s the time frame to set up the 100 new branches and additional capex.
Vikram Damani
That you guys expect to spend this quarter?
Anand Piramal
100 is for this quarter. 25 full service branches, about 20 Gold Loans branches and about 55 microfinance branches. Everything will happen in this quarter. And the capex here is very, very small. It’s not. As I said, our overall goal on OPEX to AUM remains the same. That trajectory you should continue to expect. We will calibrate our branch growth strategy to make sure that we are able to give you a good smooth trajectory on OPEX to assets. Super.
Vikram Damani
And then anything beyond the 100 branches or this is it.
Anand Piramal
Yeah. So this is for like next year we’ll open some more but I’m not ready to talk about it yet. We are still thinking through it.
Vikram Damani
Okay, super. Thank you so much.
Anand Piramal
Thank you.
operator
Thank you. You may please press star and one to ask questions. The next question is from the line of Rahel s from Safari Capital. Please go ahead.
Unidentified Participant
Good evening sir. Audible hi. Hi. Yes, hi. Hi sir. Just given this, you know total AUM. Trajectory going ahead up till FY28. So until we reach the journey. If you can sort of paint a picture about the ROA as well and the NIMS too. How does it function?
Anand Piramal
Go to the next page. Yeah, so if you look at page number five, this is our kind of long range goals. What we are, what we are targeting return on EUM. We want to target around the 3% mark. And you can see the progress we have made over the last two years. And similarly on the right hand side, from an aeon to equity standpoint we want to be in the 4.5 to 5 kind of range. And we have come now to about 3.5. So you can see the trajectories. Both these trajectories are kind of self evident in terms of how close we are to that long range goal.
We remain confident that business is positioned well to get to those outcomes over the next two to three years.
Unidentified Participant
That’s it for myself. Thank you so much.
operator
Thank you ladies and gentlemen. That was the last question for today. I now hand the conference over back to Mr. Anand Pirama for closing comments. Thank you. And over to you sir.
Anand Piramal
Yeah, thanks. I’ll take it here. One quick errata again I mentioned that it is the thing is the n series of DHFL are carried on our books at seven quarter. Rupin tells me that it’s 737, so it’s a small, it’s a little bit higher. So as long as, if we are able to revinance at around those ranges, then the net impact to us will be marginal. So that’s on that point. Thank you very much for very engaged questions this time, ladies and gentlemen. I know it’s a busy day for results. Thank you all for joining us and have a very good evening.
operator
Thank you, members of the management, ladies and gentlemen, on behalf of Piramal Finance Limited that concludes this conference. We thank you for joining us and you may now disconnect your lines. Thank you.