Motilal Oswal has issued a buy rating on Piramal Finance with a target price of ₹2,480 in its research report dated October 09, 2026. According to the brokerage's analysis, the stock currently trades at approximately 1.3x FY28E P/BV, with the target price based on March 2028 estimated sum-of-the-parts valuation. The recommendation reflects Motilal Oswal's bullish outlook on the company's growth trajectory and diversification strategy.
Piramal Finance demonstrated strong margin performance in Q1, with Net Interest Margin (NIM) reaching ~6.5%, up ~47 basis points year-on-year, while cost of borrowings stood at ~8.8%. As per Motilal Oswal's latest analysis, the next leg of margin expansion is expected to come from two key self-help levers: a richer asset mix and lower borrowing costs. The higher-yielding businesses are already generating disbursement yields well above the existing portfolio yield, with these books expected to scale and season progressively. Additionally, the company's upgrade to AA+ rating and greater access to multilateral funding should help lower refinancing costs, with NIM estimated to improve to ~5.4% in FY27E and ~5.9% in FY28E compared to 4.7% in FY26.
Piramal Finance has successfully moved beyond its balance-sheet transition phase, with growth AUM now accounting for approximately 98% of the portfolio. As reported by Motilal Oswal, retail contributions have reached 85% of AUM, leaving the legacy book at less than 2%. The company demonstrated strong momentum with retail disbursements rising 44% year-on-year to ₹125 billion in Q1FY27, while consolidated AUM increased 25% year-on-year. This growth is becoming increasingly diversified through multiple avenues including housing loans, LAP, gold loans, MFI, micro-LAP, unsecured lending, and deeper cross-selling to its 6 million customer base.
The company's cross-selling initiative is showing significant progress, with cross-sell already contributing 28-29% of business volumes. According to Motilal Oswal's analysis, this diversification strategy creates opportunities for franchise growth with lower customer-acquisition costs and potentially better credit outcomes. The established housing and LAP franchise is being complemented by these new product offerings, providing multiple avenues to support the company's ~25% AUM CAGR target for FY27.
