Note: This is a preliminary transcript and may contain inaccuracies. It will be updated with a final, fully-reviewed version soon.
Piramal Finance Limited (NSE: PEL) Q4 2026 Earnings Call dated Apr. 27, 2026
Corporate Participants:
Anand Piramal — Executive Director
Yesh Nadkarni — Chief Executive Officer of Wholesale Lending
Jairam Sridharan — Chief Executive Officer of Retail Financing Business
Vikash Singhla — Chief Financial Officer
Unidentified Speaker
Analysts:
Harshit Toshniwal — Analyst
Avinash Singh — Analyst
Unidentified Participant
Abhijit Tibrewal — Analyst
Vikram Damani — Analyst
Presentation:
Operator
Ladies and gentlemen, good day and welcome to the Q4 and annual FY 2026 earnings conference call hosted by Pyramid 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 concludes. Should you need assistance during the conference call, please signal an operator by pressing Star then zero on your Touchstone phone. The results materials 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 must 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, M.D. 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 Paramal 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 the March quarter and full year FY26 results of Piramal Finance. As you all know, during the last few weeks of this quarter geopolitical disruptions in the Gulf have created a volatile global macroeconomic environment. Crude oil prices have risen sharply. There have been also concerns around the availability of refined products such as lpg. We believe ongoing diplomatic developments and a potential de escalation could limit the overall macro impact on India.
At this stage, the effect on India’s economy and financial services sector appears contained reflecting underlying resilience. Retail, petrol and diesel prices have largely remained stable. This pricing discipline has played a critical role in containing near term inflation, preserving domestic demand and avoiding a a spike in retail loan pricing. The government’s timely interventions to support exporters have helped cushion the impact from ongoing maritime challenges. Overall, while geopolitical risks remain a key monetary bill, India’s macroeconomic stability policy responsiveness and domestic demand strength continues to support the growth outlook.
Coming to our results, the company delivered a strong quarter and ended FY26 with several achievements. I’m happy to report that we surpassed our targets we set for ourselves at the start of the year. Our total AUM grew 25% year on year and crossed the 1 lakh crore mark. We have completed our AUM mix transition with a legacy book down 59% year on year to 2,807 crores versus the target of reducing it to three to three and a half thousand crores. The legacy book is now less than 3% of the total AUM versus 66% of our AUM four years ago.
This has been perhaps the largest and fastest rundown of any wholesale book in our industry. Equally unprecedented has been the scale up of our retail business. In FY26 it grew 33% year on year to 85,885 crores. It now forms 85% of total AUM. Ours has been the fastest scale up of any retail business among NBFCs. We took four years in going from 20,000 crores to 85,000 crores, something that other retail NBFCs before us took five to 10 years to do. More importantly, while growing this book, we have sharply lowered our OPEX ratios and have kept a tight control on risk.
In Q4 FY26 the retail asset quality significantly improved across all products along with our Wholesale 2.0 AUM which grew 38% year on year. Our growth AUM increased by 33% year on year versus the 30% target. Asset quality of Wholesale 2.0 continues to remain robust with zero NPAs in this book. After breaking even in FY24, the growth business has steadily been improving its profitability. In Q4 we exited at ROAU of 2.1% versus 1.7% in Q4 FY25. For FY26 we have reported a consolidated net profit of 1506 crores versus the target of 1300 to 1500 crores.
This was a 3x y on y year on year. In this quarter both our domestic and foreign credit ratings witness a round of upgrades. Our domestic long term debt is now rated aa by all three leading credit agencies versus AA rating at the last quarter end. In Q4 we received deferred consideration proceeds of $148 million towards the sale of Piramal Imaging. We also concluded the stake sale of Sriram life insurance worth 600 crores. We also added 10,110 crores to our assessed tax losses totaling total assessed tax losses to 24,600 crores.
Overall. In the last two years we have been consistent in improving our profitability along with healthy AUM growth and stability of risk and earnings. As an upper layer AA rated retail led diversified NBSC. We are privileged to serve over 5 million customers across Semi urban India. Combining physical distribution
Yesh Nadkarni — Chief Executive Officer of Wholesale Lending
With
Anand Piramal — Executive Director
Technology and AI in our processes, we remain confident in our ability to deliver steady and healthy earnings growth. With that, I’ll hand over to Jairam to share more details on the results.
Jairam Sridharan — Chief Executive Officer of Retail Financing Business
Thank you Anand. Good evening everyone. Earlier this year you might recall that we introduced our framework for value creation.
Operator
I’m sorry to interrupt sir, we are unable to hear you.
Jairam Sridharan — Chief Executive Officer of Retail Financing Business
I’m sorry about that. Thank you Anand. Good evening everyone. Earlier this year you might recall that we introduced our framework for value creation and long term alignment with our shareholders. To refresh our memories, the framework had three drivers of value creation, Growth, profitability and predictability. And supporting these value drivers, we talked about building a future proof AI native company. I’d like to start my comments with an evaluation of our Q4FY26 performance against this framework.
Let’s start with growth which you can see on page number four of our investor presentation. You see here that Our AUM was up 33% year on year in our growth book. On a console basis AUM was up, sorry, 25% year on year and we ended the year at 1 1,230 crores. We thus stay very much on track for our stated goal of 1.5 lakh crores by FY28. The second vector was profitability on which I’d like to direct your attention to Slide 5. The return on AUM of our growth business increased further as Anand mentioned to 2.1% in Q4 versus the 1.7% we were at in the same quarter last year.
Leverage which is AUM to equity also continued to increase and we are now up at 3.6x in Q4 compared to 3x same quarter last year. We continue to progress towards our goal of 4.5 to 5x. The third vector in our value creation framework was predictability on which I’d like to draw your attention to slide number six. In the fourth quarter the growth business delivered a PBT of 495 crores, keeping up the steady and predictable trajectory of the last eight quarters. The stability and predictability are also visible in our credit risk outcomes.
With retail 90 plus delinquencies down 20 basis points quarter on quarter to 0.6%. Gross business credit cost was also down marginally quarter on quarter to one and a half percent. More importantly, as you can see on the page, the performance was extremely steady over the last four years. Let’s now get into our specific business performance metrics on the growth business. Our retail AUM growth remained strong. We ended the fourth quarter with a retail AUM growth of 33% year on year. Disbursements in retail recovered from a moderate Q3 and were up 34% year on year to 13,101 crore.
Our mortgage business comprising housing loans and LAP grew by 32% year on year to 57,837 crores. Mortgages account for 57% of the total AUM of the company and 67% of the retail AUM. If you look at slide 24, we have provided this quarter some additional disclosure on subsegments within our HL and LAB businesses. Over the years we have expanded our presence in mass affluent home loans and larger ticket LAP plus products. With our rating upgrade, our ability to serve these segments is significantly higher.
Retail AUM growth was well diversified across our product categories, all growing at about 20 to 50% year on year. Wholesale 2.0 AUM was up 38% year on year. In the fourth quarter with both real estate and mid market lending showing strong YOY trends growth AUM was collectively thus up 33% year on year to 98,423 crores. If you look at slide 30, our retail customer franchise grew by 22% year on year to 5.7 million. As Anand referred earlier, we’ve crossed 5 million as our customer franchise. This year.
Our sourcing from cross sell in unsecured disbursements is around 30% which we expect to materially improve over coming years. Our cross sell portfolio comes with significantly lower OPEX as well as credit costs. During the third quarter call we had guided towards opening 100 new branches in the fourth quarter across three formats. We have successfully delivered on that plan. After not expanding our Branch network for seven quarters, we resumed branch expansion in Q4 for which I’d like to refer you to slide 28.
In this quarter we opened 26 full service branches which we have now rechristened as urban branches. In addition to these, we’ve also opened 22 gold loan branches and added 60 rural branches which we earlier called microfinance branches. We have now taken our rural network to 136 branches in all. Our total branch network has crossed 700 in this quarter and stands at 701 as shown on slides 25 and 27. We took meaningful steps forward in this quarter on Gold loans and rural lending. Starting with slide 25, we launched phase one of our gold loans business with 22 branches in Maharashtra and Telangana.
As of today, 13 of these gold loan branches are disbursement active. We are innovating traditional Gold loan products with unique tech and AI based features. We expect to open 180 more gold loan branches in FY27 to take our gold loan branch count to approximately 200. We are spearheading our emerging rural strategy with microloans as the first product through our 136 rural branches which you see on slide 27. Our microloans AUM was up 42% year on year from a small base to rupees 1384 crore. Moving on to margin, our consolidated level NIM expanded 20bps quarter on quarter to 6.5% which you will see on slide 15.
You will also see on this slide that the Consol NIM has been continuing to close the gap with our growth book. NIM which is 7% cost of borrowing during the quarter declined by 11 basis points on a QoQ basis to 8.84%. Along with actively working on our borrowing mix, the impact of credit rating upgrade should provide a tailwind to our cost of borrowing over the coming years. Domestic credit rating upgrade from AA to AA 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 borrowings.
The AA rating also offers us access to certain parts of the lending market we could not access before, thus enhancing our ability to continue delivering industry leading AUM growth. It can also aid expansion of return on AUM and potentially also allows us to lever our balance sheet higher versus what was possible with a AA rating. All of this could lift steady State Roes by 3 to 4 percentage points on retail income. Total retail income as seen on slide 21 grew by 35 basis points quarter on quarter to 15.5% of loan book.
Our yields on loans were stable. The retail processing fee amortization continues to catch up to support the overall fee income. There was however a reduction in our insurance fee in this quarter due to a change in commercials with our partner Primerica Life on OpEx. Retail OpEx to AUM further came down by 21 basis points quarter on quarter to 3.6% per annum in quarter four. You will see this trend on slide 21. We have now consistently reduced our OPEX to AUM ratio for three years and have now entered the target range which we had indicated some years earlier.
While we have restarted our branch expansion, the continued productivity gains for our employees and branches have the potential to take our retail OPEX to AUM a little bit lower than current levels over FY27. Tech and AI have been key enablers of our growth and productivity enhancement. While we have been sharing in the past the impact of AI across five key business areas, we are now starting to share additional input metrics as well. I’d like to draw your attention to slide number seven here we have tried to share a metric for overall use of Genai techniques.
At Piramo. You will see that there is a strong growth in our total token usage across SLMs and LLMs in the course of this year showing the high levels of AI adoption in the company. In Q4 our total token volume was at 178 billion tokens in the quarter versus 63 billion in the first quarter of this year. This compares well with the best of global elite enterprise scale companies in terms of token usage for high frequency agentic AI and processing of massive amounts of document data. On slides 32 and 33 we have shared some more details of our enterprise AI strategy PML AI on slide 32 we introduce a new dashboard on the progress of AI, particularly Genai use cases across all key aspects of our business.
As you can see, AI adoption cuts across Sales, Underwriting, Collection, audit and Compliance, CX and People management. The next page, slide 33 covers our fourth quarter AI spotlight. Last quarter we had featured collections in our AI Spotlight. This quarter we feature operations. You can see on the slide that operations productivity has doubled in the last two years. Our AUM has doubled in this period whereas our operations, staff and headcount has remained roughly flat. Moving to Risk the risk performance of the company was Solid with GMPA down 32 basis points Quarter on quarter and gross business credit cost down slightly quarter on quarter to 1.5%.
Retail is 87% of our growth AUM and it witnessed significant improvement in Q4 risk across all products. Asset quality and unsecured lending showed strong improvement in the last four months. Risk metrics here are broadly back to two year ago levels. The micro loan portfolio has almost completely normalized as you see in our 90 DPD chart that we share every quarter in our semi secured business which is used car. After 3/4 of elevated risk metrics we saw a steep fall in Q4. In mortgage business risk continues to be quite steady.
We had earlier flagged a part of this business as potentially problematic given increasing risk levels. This was around smaller ticket mortgages with MSME customers. Over this last quarter however we have seen the segment stabilize and perform noticeably better than before. We will however continue to track the segment closely. So as you can see headline risk metrics are all stable to improving in Q4. However, we are closely watching segments that could potentially be vulnerable to the ongoing conflict in the Middle East.
We had originally taken MSMEs in the FNB sector as the epicenter of potential vulnerability and impact, but we have since expanded our watch list to include a broader set of sensitive sectors including travel and logistics, textiles, gems and jewelry, food processing etc. As of now, risk metrics here all appear contained. Bounce rates in these vulnerable sectors in April have come in at the same level as March. We use AI to rapidly scan and classify hundreds of industry subsegments by their sensitivity to the Iran conflict, mapping direct impact first and progressively identifying knock on effects across connected sectors.
This use of AI turned what would have been weeks of manual analysis into near real time exercise allowing us to move quickly from portfolio diagnosis to targeted product level action. We have thus tightened fresh underwriting in these sensitive sectors. We believe that customers from these sectors who also have moderate to high pre existing leverage are likely to be the most vulnerable. That is the segment where we are taking most of our credit actions right now. Overall, we have not seen any visible impact of the conflict on retail risk metrics yet.
We remain however, watchful and ready to act as necessary on the liability side of potential impact of the conflict. We continue to maintain strong liquidity buffers. Our average quarterly LCR in Q4 was 450%. We have cash and cash equivalents of 8,640 crores equivalent to 8% of all our assets. CPs form less than 1% of our liability stack as of March end. This conservative position both minimizes our liquidity risk as well as maximizes the opportunity for us to benefit from falling rates at the short end.
Finally, let me come back to the overall company Having met all our stated targets for FY26 which Anand referred to earlier, we have refreshed our targets for FY27 which we have listed on slide number 17. We are sharing three pieces of goals and guidance for the coming year. We expect another year of approximately 25% growth in total AUM. We expect consoled profits to also grow at approximately 50% and we expect to exit FY27 with a return on AUM of approximately 2.5% versus the 2.1% we reported in Q4 FY26.
You’ll notice here that we have not called out a separation in language between Consol and Gross. That’s because given the relatively small size of the Legacy book, one should expect that somewhere along this course of this year we would see reporting Legacy as a separate segment, so you should expect that to happen sometime during the course of this year, though we are not calling out a specific date on that yet. With that I’ll hand over the call to Yash to discuss our wholesale business. Yash
Yesh Nadkarni — Chief Executive Officer of Wholesale Lending
Thanks jaira. As at March 2026 the wholesale 2.0 book stood at 12,538 crores which was a growth of about 38%. Year on year real estate to CMML mix stood at 73. 27. Average ticket size of the book was 53 crore and the average yield of the portfolio was stable at 14.4 crore. Asset quality remained robust with zero NPAs in this book. As Anand mentioned earlier, during the year we disbursed 9,292 crore with fresh sanctions across 135 deals. Repayments continued to be robust as we received 5,859 crore or about 60% 63% equivalent of the disbursed amount during the year.
In the fourth quarter the prepayments were particularly strong amount amounting to almost 82% of the new disbursements. While strong rates of repayments continue to be a major growth headwind for us, it also highlights that the portfolio seasoned very well and is performing well ahead of our underwriting. In fact, due to These significant prepayments, almost 50% of the contractual repayments due to us in FY27 have already been paid by our borrowers to us to date on Wholesale 1.0 or Legacy Book we ended the book at 2,807 crore which was a reduction of 59% during the year.
This is now a very small part of our balance sheet and we will continue to work on resolution of this book over the following quarters before handing over to Vikash. I will also say that we continue to monitor the impact of the Iran War on the real estate and CMML segments. Since the war broke out in Feb. To date Earth portfolio sales, collections and other operating parameters have continued to remain very strong. We also feel good about the granularity and the diversified nature of our portfolio but will continue to monitor our credits proactively as we progress from here with this over to Youkash.
Vikash Singhla — Chief Financial Officer
Thank you Yash. Moving to our financial performance in Q4FY26 we reported consulted net profit of 502 crore versus Q4 of FY25 net profit of 102 crore full year FY26 net profit was 1506 crore versus 485 crore in FY25 pro forma PBT for growth business stood at 495 crore in Q4FY26, implying a growth of 6.61percent year on year growth. Business OFX grew by 12% year on year versus income growth of 24% year on year. Operating profit thus grew by 37% year on year to 850 crore in Q4FY26. We reported gross business credit cost of 1.5% versus 1.6% in Q3.
Our total GNPA and NNPA were down 30bps quarter on quarter each to 2.3% and 1.6% respectively. Our net worth stands at 28,191 crore. Our capital adequacy is very strong at 19.8% as of March 26. Our profitability continues to improve and we also have investment that can potentially be divested to unload capital. Just as we have done in the past. We remain committed to maintaining comfortable margin of safety over regulatory capital requirement. We will use all the available levers at our disposal to ensure that.
With these remarks, I would now like to open the floor for questions. Thank you.
Operator
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchstone telephone. If you wish to remove yourself from the question queue, you may press star and two participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. We’ll take our first question from the line of Shreya Shivani from Nomora. Please go ahead.
Unidentified Speaker
Yeah. Hi. Thank you for the opportunity. Hi. I have two questions. My first question is on the Consol Nim and the growth nim. The gap between these two has been narrowing. It’s at about 50bps as a fourth quarter. Right. Six and a half and 7% or so. The legacy book is now like very minimal. Where do we see our. I’m assuming the growth NIM is where the consolidation NIM will reach and then beyond that, what are the levers for expansion? I mean I get your gold loan and MFI segment would be one of the major levers.
And my second question is on the legacy book. I mean that scale down is quite impressive. Fair to say that majority of it is actually SRS and stage one. So how should we think about the legacy book movement over the next two years? It’s at about 3.3percent or whatever. Less than 3% of your AUM mix right now.
Questions and Answers:
Jairam Sridharan
Yeah. Thank you. Shreya. So first question, where is the console name headed? Obviously console name and growth nim will become effectively the same, you know, hopefully towards the latter half of this coming year as the legacy book becomes smaller and smaller. Now what is the growth nim of course today is about 7%. What, what are the levers on the growth book name itself? There are two main levers. One is exactly what you said, which is product mix on the asset side, which is increase in unsecured, which we have guided before.
We would like unsecured to be about 400 basis points larger. 400 to 500 basis points larger in our mix compared to where we are right now. Plus some of the new products that we are launching, particularly gold which is secured but has high yields. So between the two of them, the mix story is going to be a little bit margin accretive. But even more importantly on the liability side, the AA rating has not yet shown its effect on our cost of borrowing. And as I mentioned before, I expect the AA impact to be about 50 to 80 basis points over the course of the coming three years because three years is the time of churn of our liability side book.
So that should come in as well. So those are the two big levers, one on the asset side and one on the liability side which should help lift our rnims on an overall console basis once we have merged everything together. Now to your question. On the legacy book, we are at less than 3% of the portfolio here. You should see we are talking about legacy book next year at this time. We would be very, very surprised. It will become irrelevant by the latter half of this year. By Q4 of the year it should become kind of so small to be irrelevant.
And that’s why our statement earlier that you will just see us talk about one set of numbers rather than X of legacy numbers by the end of this year.
Unidentified Participant
Okay, that’s great to hear. Just a follow up on the scale up of the unsecured book. So fair to say the unsecured book scale up would be equally across digital loans, which is aggregated loans and your own sourced UBL book. Or one would take precedence over the other or you’d focus more on one
Jairam Sridharan
Risk performance. Shreya. As it happens, the last few quarters digital loans have performed super well. If you see page 22, you look at the risk performance of digital loans which is on the bottom left. It’s been insane. Good. So currently we are somewhat bullish on that segment. But if it turns, if that curve starts to turn, we’ll be equally Ruthless in actually starting to cut that and go even more towards branch business. If you see the salary PL chart on the same page, you’ll see it’s been rock steady.
It’s been really, really strong. So we love both our branch based businesses as well as our digital businesses which takes precedence. That’s a month on month, quarter on quarter call depending on what the risk look like. So we don’t have a philosophical bias on one versus the other.
Unidentified Participant
But it’s easier to scale up digital loans faster than the branch LED salaried PL or ubl. But
Jairam Sridharan
It also tends to be more volatile. So in bad times we also cut it much more ruthlessly. So you might recall that when digital was going through its peak in FY25 we had cut it by more than 60%. So volumes also disappear there very, very quickly.
Unidentified Participant
Right, right. This is very useful. Congrats on a good set of numbers. Thank you. Thank
Jairam Sridharan
You.
Operator
Thank you. Next question is from the line of Harshit Toshnival from Frame G Invest. Please go ahead.
Jairam Sridharan
Yes, your audio is not
Operator
Clear. Harshit, can you use your handset mode please?
Harshit Toshniwal
Hi, is this better?
Jairam Sridharan
Much better, yes,
Operator
Please go ahead.
Harshit Toshniwal
Yeah, the question was two prong sir. So one was on the other income obligee income for the growth business itself. So you mentioned the statement about some change in agreement arrangement with the life insurance partner. But like if in general I look at that number as a percentage of our retail growth that’s Now I think 0.5 for 4Q and obviously there was some amortization impact which was also going on if I’m not wrong. But where we should look at this number because given our asset mix ideally 80, 90 basis points.
70, 80 basis points is something which is, which is not unreasonable. That was one point.
Jairam Sridharan
Your point is correct. What we have in Q4 is low. It needs to go up. It will go up. There was a one time event that we had in Q4 where we reversed some fee income to in aid of our associate company which is our life insurance company for, for some technical reasons I’d not like to go into that here but it’s a one time adjustment which we did to help them out and it is a company where we own 50% so there is value accruing eventually happening to us. So we’re not particularly worried about it. But your point on where that fee income should head is absolutely correct and you will see normal service being restored very quickly.
Harshit Toshniwal
Got it, got it, got it. And the second question was on the piece of right now we are standing at 2.1 on the growth AUM and this is with 1 1/2% credit cost and probably if we plan to end FY27 with 2.5 then I’m just trying to marry these two facts that our credit cost in general you said that should be 1.92% as a steady state one. So are we which is 40 basis points higher than today’s number. So are we expecting FY27 credit cost to remain benign because of probably for whatever reason or do you think that it’s it’s the margin and the cost levers and fee income levers etc.
Which is helping you stick on to that 2.5 number because I’m third because 4Q 2.1 is on the help of that 40 basis points lower than sustainable credit cost.
Jairam Sridharan
That’s a great question harshit and the answer is pretty much the second half of what you said. Yes you’re right that we have been surprised positively by how good the risk environment has been. I thought risk environment through the year was good. Q4 turned out to be even better. So yes we are mildly positively surprised. But you will also notice a fact in our presentation and if you look at some of the new disclosures we have started which is the sub segment level disclosures and mortgages etc.
You will see that over this year we have started doing a little bit of more prime like business. You will see more of that coming forward which will help our overall risk performance. Let’s see how much we are able to do it, et cetera. But importantly see there are three things that can change or that will change in our Dupont opex to assets which will continue to get better. We believe there’s another 50 basis points of play there cost of borrowing which as I mentioned before has 50 to 80 basis points over a three year period so that should get better on a interest rate cycle adjusted basis and then there is this credit cost which will probably go in the opposite direction which if my earlier expectations are correct it will probably eat away some of the delta.
But we believe there are there is enough play in the first two that we can hit two and a half by Q4 of the of the coming year even if there is some normalization of credit cost.
Harshit Toshniwal
Great sir. And last question Jerem was so clear in legacy book is frankly is going to be very relevant right now but still if I look at probably the write offs of 15001600 crore which we have used from our gains and another 20 so it’s a 3,4000 crore book. Should we in our minds expect some recoveries? It’s going to be a bounty itself but at least on the current 2,800 crore because I’m not sure barring Sriram life we will not have much more capital gains left but in general more from just a recovery point of view rather than recognition that should we hope for some benefit on that side.
And probably the last question just attached to this itself is on the capital adequacy. We are right now at around 19 and a half now if you you mentioned slightly in the opening remarks of some of the levers which can free up some capital. But if you can help us elaborate that till what time we don’t need capital with this kind of a growth.
Jairam Sridharan
Yeah, great questions Akshit on your first one which is should we expect, I’m just paraphrasing you, should we expect any sort of recoveries to come from all the provisions that we have made in the legacy book? You’re saying that hey broadly we expect no further recognition issues and no further hits. So probably no kind of negatives to the PNLs going forward. But are there any possibility? The answer to that question is a qualified yes. We have been conservative in the way we have provided over the last few quarters because we had some opportunities and some one off gains.
We have used that and it is reasonable to expect that as the unwind completes between what we have on the book and a little bit of what we have off the books in the form of AIF etc. There are a few hundred crores. I will not specify an exact amount. I’d just say that there are a few hundred crores of potential kind of write backs that you can expect. But I’m not specifying a number nor a specific time period but you should expect that. I think there is something there in what you said in terms of the way we have gone about providing over the last few quarters.
Your second question was on capital. Again a great question. We ended the year and the quarter at 19.8%. We have said in the past that while the regulatory requirement is 15% if we get to the 17.5%, 18% kind of range we will probably be looking at raising capital in this quarter. If you see our consumption has only been 50 basis points, net consumption of capital has only been 50 basis points which means we have some Runway ahead of us when we are at about 20. So we have maybe four quarters of Runway, three to four quarters of Runway depending on how you look at it.
And the kind of profitability we have in the coming year. We have some Runway left. Let’s see what we need to do. We have some other levers as well to take care of capital needs, if any. Never say never on any of these things. But our current levels are healthy and consumption rates are still relatively modest. And so we should be able to get through a few quarters pretty easily.
Harshit Toshniwal
Got it. Perfect. Great. Thanks a lot, sir. Congratulations.
Jairam Sridharan
Thank you.
Operator
Thank you. Next question is from the line of Avinash Singh from MK Global Financial Services. Please go ahead.
Avinash Singh
Yeah, good evening. Thanks for the opportunity. A couple of questions. The first one continued on the capital part. So if we were to see that you know the balance sheet leverage it is still pretty much on the lower side. So from the networks that is on the balance sheet what all sort of adjustment on regulatory capital because it seems a pretty big number. I mean is it kind of the deferred tax asset that front end income. So that’s really, I would say large number because the balance, I mean asset equity is not yet four times and the capital adequacy is relatively lower.
So that’s one. And particularly considering the fact that that on the risk rate side also you will have a mortgage side that will not risk kind of a risk weight intensive. So that’s why the second one is on the thing the tax. Now the given that you know the tax accumulated tax losses are close to 25,000 odd crores. What is the kind of a timeline by which you need to kind of consume it? So just to get an idea that okay, if that entire this is going to provide you tax. Thanks.
Jairam Sridharan
Yeah, thank you Avinash, great question. The first one your the deductions from capital. There are three main deductions from net worth to get to net owned funds. NoF is what goes into the numerator of CRAR calculation. Net worth is what you see on the balance sheet. 28,000 crores. So what are the three Deltas from here to NoF? The three Deltas are. There’s one lot which is regular business as usual deduction which you will see in any lending company. So things like cash position. If we have for securitization some unamortized DSA fees, etc.
Or DSA payouts, etc. Some of that stuff will be sitting there. That’s one element. The second element is DTA that has been created. We have about 2000ish crores of 2,500 or 700 crores. 2,700 crores of total DTA that’s on the balance sheet, that’s number two. And the third deduction is investments which is all the Sriram General and 5 and some of these other things, all those investments, those three things roughly equally distributed, about 25 to 2700 each is the number in all three of them. That’s the delta between what you see as net worth and what you will calculate as net owned funds.
Of these three, the first is pretty normal business as usual. Even in the end stage you should always expect to see that the second one which is DTA exists in our case because we have so much accumulated losses, etc. So we see, we get the benefit of that from a PBT to PAD standpoint, but you have to pay for it a little bit in the form of capital. So that the third one which is the investment is the one that can go away. As we get diverse, as we keep divesting more and more of the assets, that part will go away.
So the gap that you see between network and NOF will narrow to that extent. It will narrow by about a third of what it is right now. So that’s as far as capital is concerned. Your second question was what was the question? Okay, so see the total, we have about 24,500 or so of accumulated taxes, tax losses. We have created about 2100 crores of loss related DTA. Right. Carry forward loss related DTA. That 2100 crores is roughly equivalent to forex, that’s 8400 crores. So if you net off that, essentially you have 16, give or take, roughly 16,000 crores of future profits of the company are tax protected.
As far as P and L is concerned, that’s the simplest way I can actually frame this. So however long it takes for us to consume 16,005, 16,000 odd crores, as long as that period is less than, what is it, seven years, is that 2032? 2032 till about 2032, then we can keep, we can keep, keep using it. So tax predicted.
Avinash Singh
Okay, okay, clear and just one again on this. So in a normal course of business, as you kind of know your profit start to go up and you start to sort of. So how will this thing, this your carry forward losses will move, it will keep creating dta and I mean so will this DTA go to rising or kind of it will be offsetting. So how will the DTA kind of typically assume the, you know, the typical year? Two and a half percent.
Jairam Sridharan
Yeah. See the way to kind of think about this is every quarter we will do an assessment of our virtual certainty of profits which you will discuss with our auditors. Every year roughly we will discuss this with our auditor and based on their, based on their advice we will create DTA as necessary to offset. But from a P and L perspective, the way you will see it is that effectively your PBT and PAT will be pretty close to the same except for some line items which are taxable, like some dividend line items, etc.
Or some other line items might be taxable but. But mostly you should see PVT go to PAT for the foreseeable future and hence for the next kind of 16 or 1000 crores of PBT. From a modeling perspective, you can keep an effective tax rate in your model at a very low number unless something dramatically changes. From here, this is all with the current level of carryforward losses that we have. Any future carry forward losses that get created will add on to this. And every time we get tax authorities approval on some carry forward losses they are valid from that point of time for eight years.
Avinash Singh
Okay, got it. Thank you. Thank you.
Jairam Sridharan
Thank you Avinash.
Operator
Thank you. Before we take the next question, would like to remind participants to ask a question please SRN1 on your phone now. Next question is from the line of Nishin Savate from Kotak Securities. Please go ahead.
Unidentified Participant
Thanks for taking my question. Maybe you touched upon this already, but in terms of cost of funding, what is the difference between incremental and average cost of funds?
Jairam Sridharan
Yeah, so our stock cost of borrowing is about 8.8% in Q4. Our incremental borrowing cost for long term money was 8.4%. We didn’t raise much short term at all. So I don’t know. My guess would be that short term will be like seven quarter. Right now if we went to the market and started raising short money. So then you can take any mix between short term money at 7 quarter and long term money at 840. That should give you a little bit of a sense of where our Q1 will be. We are currently not raising anything short term.
We have. We’ve only been doing long term over the last four or five months.
Unidentified Participant
And in terms of your bucket, you know what could be? I mean if I have to just take a normalized bucket, how would that cost look like? What do you mean by
Jairam Sridharan
Bucket? Oh, I said okay. Okay, like that. So see this, I think we would. This is still probably at the higher end of the entire double eight plus range. If you look at the best in AA, they are probably 50 basis points better than this. Maybe 60 basis points better than this. On the long term,
Unidentified Participant
Sure. So probably you touched upon this. But you know, now as the cost of funding comes down, you know, how does that really sort of feed into your asset side strategy?
Jairam Sridharan
Yeah. Do you see the rainbow composition
Unidentified Participant
Changing? Yeah, sorry, go ahead. So
Jairam Sridharan
Two things there. We will take some of the Delta into BNL and. And we’ll use some of the Delta to drive growth. So effectively we will build some new businesses which we could not do when we were at A AA and that will help us actually drive growth. And the rest we will essentially feed through to our Dupont and get closer to our 3% return on AUM goals that we have shared with you all. So both of those will happen. You’ve seen some early signs of that. You saw some of our high ticket lab and some of our MASA affluent housing disclosures.
This time those are more AA like businesses which we have been in anticipation of what was to come, we have been building a little bit of that muscle and as you can see, we have made some decent progress. You could see a little bit more of that in the times to come as well. So we were a purely below prime player in the past. Now you could see us pivot and have a little bit of our portfolio which is a bit more prime like.
Unidentified Participant
Got it. And the second question is walking the inorganic route. Is there anything that you are sort of planning? I won’t say on the cards, but are you really thinking on those lines?
Jairam Sridharan
Yeah. So nothing has changed on the front. As we have said it in the last couple of calls. I’ll repeat, we are quite interested in M and A. The Piramal House has had a DNA of doing mergers and acquisitions and growing inorganically. We continue to be interested. However, if you look at the history of the Piramal House, you will also realize that we are value based acquirers. We have limited interest in buying kind of perfect assets at fully priced in value. We’d rather find something which, even if it’s a little imperfect, but it is.
Is that a value pricing? We prefer that kind of a story. The market has not been conducive for that kind of M and A in the last few quarters and last couple of years. But we remain interested. We remain interested in the spaces of microfinance, gold loans, msme, any of these spaces. We remain interested and we do look at a lot of deals, but nothing’s imminent.
Operator
Nishin, does that answer question?
Unidentified Participant
Actually, I think the management line has got cut off.
Jairam Sridharan
Oh, hi.
Unidentified Participant
Yeah, yeah, yeah, yeah. You talked about the. Yeah,
Jairam Sridharan
Sorry, I don’t know. I don’t know where you lost us. So let me just quickly repeat. We remain interested in the spaces of microfinance, MSME Gold, etc. However, what we are looking for is an asset which is priced at value and not fully priced in. So we are okay to look at slightly imperfect assets where we believe with infusion of management we can actually make the assets or take the assets to a better place. But it needs to be add value which that strategy has not had much bite in the recent market because everything has been priced well, even assets in the MFI space which is not our style of M and A.
So we are still in the wait and watch mode but we are looking at all transactions but nothing is in minute
Unidentified Participant
And anything. Just on the, on the promoter side, is there any sort of a, you know, kind of a, kind of a holding, you know, thought process or threshold or something in mind?
Jairam Sridharan
The promoters have always held kind of 45 odd percent. We are the promoter holding currently is 46%. We are perfectly happy with that situation and, and promoters remain fully committed to supporting the company in whichever way it needs, it needs to proceed. So no, there is, there’s nothing very specific to talk about there.
Unidentified Participant
I’m just referring to, you know, any dilution that could happen because of a potential M and A.
Jairam Sridharan
Yeah, but none of the M and A that we. That would come our way in the segments that I mentioned are large enough to really merit anything. Like here or there, man. Like it’s not going to move things too much. We’re not looking at a transformational M and A right now. We don’t need one.
Unidentified Participant
Got it, Got it. Thank you very much and all the best.
Jairam Sridharan
Thank you Nixant.
Operator
Thank you. Ladies and gentlemen, to ask a question please press star n1 on your phone. Next question is from the line of Abhijit Tibriwal from Motila Loswal. Please go ahead.
Abhijit Tibrewal
Yeah, good evening. Am I audible?
Jairam Sridharan
Yes, Abhijit.
Abhijit Tibrewal
Yeah, Hi sir. Just two things. One is on slide 17 we have articulated a target with which is that RO AUM for exit quarter Q4 we want to take it up from 2.1 to 2.5.
Avinash Singh
Right.
Abhijit Tibrewal
So just trying to understand the levers here. So I mean the question here is that as we speak we have said in the past that we are working on improving the yields. Whether that comes to a change in product mix or even existing products in more kitchen where we are trying to increase the yields and at the same time this credit rating upgrade will give us some benefit on the cost of borrowing side. I recall you saying in your opening remarks, anywhere around 50 to 80 basis points in addition to that, I mean OPEX is something which has been kind of coming down through a lot of concerted efforts.
I recall you pointing that we’ll now be adding more branches in this presentation. Also you have shared that we are forayed into gold lending now and plans to add more gold lending branches. So I mean, fair to suggest that large part of this Ro AUM expansion that we are talking about will come from the margin side because your opaques, I don’t know how to think about it, might remain elevated, right? Given that you are already there in that band, the guidance that you had put out even after lowering that band in your AI investor day.
So and credit costs, I mean given how the environment is, I think 1.5% maybe well primed now, right, in terms of credit costs. So we think about the various levers.
Jairam Sridharan
Listen, so there are, you’re pointing out all the three things. They are exactly the right things, you know, they. But I do think there is more play in OPEX to assets. I believe that we have, we have another kind of, you know, 50 odd basis points that we can still do. This is probably the last year or so that we can, that we can bring, we can, we can do this kind of OPEX narrative. But I think the OPEX narrative is not over. So we will continue to see that. So hold on to that. That will still be a meaningful part of the delta.
The second big favorable delta, of course, is the NIM story, which as you rightly say, is all going to be driven on the cost of borrowing side from the liability side rather than on the asset side. On the asset side, yes, we will have a little bit more of unsecured and a little bit of gold, both of which is yield accretive. But we also have a little bit of this prime thing that we will start to do. On the whole, yield should go up, but even more so the margin will grow a bit more than where we are as our cost of borrowing adjust to the AA reality, which we have not yet started.
We have not borrowed even a single bond issue. We have not done in the market ever since we became aa because the markets have not been conducive. So over the next few years you will see us go there. So you should expect to see the cost of borrowing fall. So cost of borrowing and OPEX are the two big areas of favorability and that’s what should drive all the delta on the customer credit cost side, even if there is a little bit of negative, I.e. 1.5 goes up a little bit from here, we will still be able to absorb that through the first two that I mentioned and hence we feel comfortable guiding towards two and a half for exit quarter.
Abhijit Tibrewal
Got it, thank you. And the last question I had was maybe just trying to clarify further why you’ve already spoken or answered a couple of participants in this call this unsecured segments, basically unsecured business loans and pn. I find it a little difficult to understand that. How is it that despite disruptions in various supply chains, I mean you as well as other lenders who’ve reported until now have not seen any alarming impact of that. So I mean should we then conclude that maybe some second order third order effects of whatever disruption that we are seeing from the West Asia war might come in the coming months?
Or do you think that customers, and particularly self employed and business customers are resilient and they have managed the disruptions very well?
Jairam Sridharan
The thing is Abhish, like they will. It is inconceivable if the war continues for a while longer, it is inconceivable that you will see no effect. Q2 event. I don’t think there was no chance of seeing it in Q4. I don’t think you’ll see it in Q1 either. But in Q2 you should watch because every client does have a little bit of a buffer, a little bit of a margin of safety. They can go on for a month or two. Even after they start feeling effects of business slowdown, they will go on for a month or two.
After that they will slowly become tardy in their repayment and then it takes them three months for them to actually flow into a 90 day bucket. So this all will take time. So watching a 90 day delinquency metric, it is not going to move anytime soon. My guess is July, August is when you can actually see that outcome keep at all. And that’s what bounce rates are important to watch. That’s why if you heard our earlier commentary, we said that in April the bounce rates of the segment are the same as in March.
Surprising but true. We will keep watching it. We don’t know and we shouldn’t guess where this thing might hit. It’s not our job to reason out why something is happening or not happening. It is our job to watch it like a hawk and react the moment we see something happening. So far nothing much to report.
Abhijit Tibrewal
Yeah, this is useful. Thank you so much. Jayaran sir, I wish you and your team the very best.
Jairam Sridharan
Thank you.
Operator
Thank you. We’ll take a last question from the line of Vikram Damani from Damani family office. Please go ahead.
Vikram Damani
Hi. Am I audible?
Jairam Sridharan
Yes you are. Congratulations
Vikram Damani
On a good set of numbers. I had two questions. First is could you explain the 900 crore, the two line items on the PL, the net loss on fair value changes at almost thousand crores
Jairam Sridharan
And the
Vikram Damani
590 crore impairment that you’ve taken. And the second one was around your branch expansion. You’ve sort of gone from 570 to. From 570 700. Now you’re going to 880 as per your presentation. So given that any sort of change can we expect in the OPEX to AUM because new branches will take time to up to vintage so far has done very well on these two things. Thank you.
Jairam Sridharan
Yeah, no, no, thanks for saying that. See on the first one you know you point to two items which are, which are write down the markdowns we took in this quarter to make good use of the one time gains that we got. You might recall that there are two important one time gains that we received in this quarter. One was the deferred comp component of the pyramid imaging sale and that is about 1300 crores or thereabouts. And there was a 300 odd crore, 250 odd crore gain on the sale of the Sriram life insurance business.
So we had the 1500 crore. We wanted to not take it through to PNL or we wanted to kind of strengthen the balance sheet appropriately. Now that we got that, we got that balance. The line items you are referring to are our ways of strengthening the balance sheet. That is identifying either areas where potentially in the future some losses could come. And to preempt that and actually take roll that to now and then take the it’s now itself or areas where in being sort of prudent it is appropriate to just put something away even though there might be a chance that some of it might come back to you in the future.
I don’t want to go into it in any more detail than that. But suffice to say that this helped us clean up the old legacy book quite nicely and also created some pockets of conservatism in the balance sheet which can help us on a rainy day in the future.
Vikram Damani
So can I assume that you just prove broadly increase your buffer more to do with the legacy?
Jairam Sridharan
I think it’s a fair way to talk about it. The way I’d say this is that the Increase in our safety buffer is probably a third of the entire thing. The other 2/3 is probably stuck. Would have come to us anyway, but maybe over the next two years.
Vikram Damani
Okay, good to know. Thank you.
Jairam Sridharan
There was a second question on OPEX to Assets and whether OPEX to Assets is likely to increase because we’re investing new branches. The answer for next year is no. We have come up with our branch plan in such a way that our OPEX to Assets will continue to fall. And let me restate something I said. I think in a previous call that if it comes to choosing between a declining OPEX to Assets ratio and putting up new branches in this year, our bias will still be towards the OPEX to Assets curve. We want the OPEX to Assets curve to come down for one more year.
After that, we might be more comfortable for it to be stable, but we want it to come down for one more year. So I don’t think it will come to making that hard choice. But if it does come to making that hard choice, we will choose in favor of the OPEX curve rather than in favor of branch openings. Let me also add that the area where we are adding branches are gold and rural lending. A gold branch takes about one third of the operating expense of a regular urban branch on an annualized basis about 1/3.
A rural branch takes about one tenth the level of investment of an urban branch. So these two categories where we are growing branches, they are actually much cheaper branches than what we regularly do in our full service branches. So we should be okay. But if my math is wrong and if we end up seeing that OPEX curve starts to move up, you will probably see us give up on the branch growth, but not give up on the OPEX curve.
Vikram Damani
Very, very useful. Thank you so much.
Operator
Thank you. I now hand the conference over to Mr. Jayaram Sridharan for closing comments. Thank you. And over to you, sir.
Jairam Sridharan
Thank you very much everybody. Have a great evening. Thanks for participating actively in our call. We look forward to hearing any more from you. If you have more questions, please do reach out to Ravi and the IR team and they’ll be able to share more data with you. Thanks and have a great evening.
Operator
Thank you. Members of the management, on behalf of Siramis limited That concludes this conference. We thank you for joining us and you may now disconnect your lines.