Piramal Finance Ltd Management Discussions

INDUSTRY STRUCTURE AND DEVELOPMENTS

Indian Economy

Just over a decade ago, India was grouped among the Fragile Five economies - a label reflecting concerns over elevated current account and fiscal deficits, weakening growth, and vulnerability to external shocks. At the time, India was the worlds 12 th -largest economy, trailing peers such as Brazil and Russia.

Since then, Indias economic transformation has been remarkable. With a GDP of approximately US$4.15 trillion in 2026, the country has overtaken several major advanced economies, including Canada and France, and is now closing in on the United Kingdom and Japan 1 . More importantly, Indias macroeconomic foundations have strengthened considerably, supported by a more diversified economy, improved fiscal discipline, and greater resilience to external shocks.

The medium-term outlook remains equally compelling. According to projections from the International Monetary Fund, India is expected to become the worlds third-largest economy by 2031, underscoring its sustained growth momentum and increasingly prominent role in the global economic landscape.

Beyond headline economic expansion, India has also made significant progress across a range of social development indicators, particularly those aligned with the United Nations Sustainable Development Goals (SDGs). Over the past decade, the country has recorded meaningful improvements in neonatal mortality rates, the incidence of diseases such as tuberculosis, access to institutional childbirth facilities, availability of safe drinking water, and household electrification. Together, these gains reflect not only the scale of Indias economic rise but also the broadening of developmental outcomes across its population. In many ways, Indias economic resilience is underpinned by these improvements in quality of life and human development.

Indias progress has been recognised by global credit rating agencies. During the year, Standard & Poors upgraded Indias sovereign credit rating to BBB from BBB-, while Morningstar DBRS raised its rating to BBB from BBB-low. Japanese rating agency Rating and Investment Information, Inc. (R&I) also upgraded Indias long-term sovereign rating

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2 World Economic Outlook (April 2026) - GDP, current prices

3 World Economic Outlook (April 2026) - Current account balance, percent of GDP

to BBB+ from BBB, while maintaining a Stable outlook. The upgrades reaffirmed Indias position as one of the worlds largest and fastest growing economies, and also among the most dynamic and resilient major economies.

Indias Peer set with similar sovereign Credit Rating

Country / Region S&P

Source: S&P Global 4

These upgrades were supported by Indias favourable demographic profile, robust domestic demand, sound policy framework, and continued progress on fiscal consolidation. Rating agencies highlighted the governments success in strengthening public finances through buoyant tax revenues and subsidy rationalisation, while also acknowledging the countrys manageable debt burden and strong growth prospects. They further noted Indias improved external stability, reflected in a modest current account deficit, sustained surpluses in services exports and remittances, a low external debt-to-GDP ratio, and comfortable foreign exchange reserve coverage.

It is this foundation of macroeconomic strength that has enabled India to navigate recent external shocks with relative stability. While much of the global economy grappled with heightened uncertainty arising from shifting trade dynamics and broader geopolitical disruptions, Indias economy is estimated to have expanded by 7.7% in real terms during FY2026. Growth was supported by resilient household consumption, sustained public investment, and a stable domestic demand environment.

Taken together, these developments reaffirm Indias position not only as one of the worlds largest and fastest-

growing economies, but also as one of its most resilient. The combination of stronger macroeconomic fundamentals, improving social outcomes, and enhanced policy credibility has left the economy considerably better placed to withstand external shocks than during previous periods of stress.

However, developments in the Middle East warrant close monitoring. India entered the current crisis from a position of considerably greater macroeconomic strength than during previous episodes of external stress, including the 1991 Gulf War. Lower fiscal deficits, a contained current account deficit of around 1% of GDP, and foreign exchange reserves approaching US$700 billion provide substantial buffers against external shocks. These strengths are reinforced by the scale of a much larger economy and the fact that the conflict followed a prolonged period of relatively moderate crude oil prices.

As a result, the immediate economic impact has remained manageable. Headline inflation has stayed broadly contained at around 3.4%, supported in part by the governments decision to shield consumers from higher global energy prices through stable retail fuel prices.

Nonetheless, signs of pressure are beginning to emerge. Exports to the Gulf region have weakened noticeably, although this has been partially offset by continued growth in exports to other markets. More importantly, Indias dependence on imported energy remains a structural vulnerability. While efforts to diversify sourcing towards Russia and Latin America have helped ensure supply security, they have also resulted in a higher average import cost, increasing pressure on the trade balance.

Policy responses have been both timely and proactive. Measures such as fuel tax reductions, targeted support for exporters, and the consideration of credit guarantees for affected sectors have helped preserve business confidence and mitigate the near-term economic impact.

Looking ahead, the outlook will depend largely on the duration and intensity of the conflict. A prolonged period of elevated energy prices could begin to affect hydrocarbon-intensive industries, place upward pressure on inflation, widen external imbalances, and tighten domestic financial conditions. While Indias stronger macroeconomic fundamentals have limited the first-order effects of the shock, the extent of any broader economic disruption will ultimately be determined by how long these external pressures persist.

4 Sovereign Risk Indicators - S&P Global Ratings

INDUSTRY OVERVIEW

NBFCs: Enabling Indias Next Phase of Financial Deepening

Indias credit landscape continues to offer significant headroom for expansion. Despite a steady rise in private sector credit-to-GDP from 37% to 50% over the past decade, the ratio remains well below levels seen in middle- and high-income economies, underscoring the structural opportunity for further credit deepening 4 . Sustaining Indias long-term growth trajectory will require credit expansion of nearly 16-17% annually - roughly 1.5 times nominal GDP growth - pointing toward a durable and multi-year credit upcycle.

This opportunity is closely intertwined with Indias evolving consumption story. With per capita income now approaching US$3,000 and the middle class projected to reach ~38% by 2031 and almost 60% by 2047, the economy is poised for a sustained consumption boom 5,6 . Incremental demand is likely to be driven increasingly by Tier 2 and Tier 3 markets, alongside a structural shift in spending patterns. The declining share of essentials in household expenditure across both rural and urban India reflects rising discretionary consumption and improving standards of living.

Within this backdrop, Non-Banking Financial Companies (NBFCs) are structurally well positioned to capture a large share of incremental credit demand. Bank credit growth is expected to remain relatively moderated at around 12-13%, constrained in part by slower deposit mobilisation. This creates a natural space for NBFCs to bridge the gap. NBFC credit is already expanding at approximately 18-19% as estimated by CRISIL, and with the sector accounting for only about one-fourth of overall lending, there remains meaningful room for further scale-up 7 .

NBFCs have also built a strong competitive position in underserved and high-growth segments of the economy. MSME lending, for instance, has grown at a pace significantly faster than traditional bank lending, while in segments such as Micro-LAP loans below 10 lakh, NBFCs command a dominant market share. Importantly, these segments are steadily becoming more formalised and de-risked through structural reforms such as credit guarantee frameworks, co-lending partnerships, and the rapid adoption of digital public infrastructure including India Stack, GSTIN, and TReDS. These developments are improving underwriting quality, expanding access to formal credit, and reducing information asymmetry across the lending ecosystem.

According to the RBIs latest Trends and Progress of Banking in India report (December 2025), industrial and retail loans together account for 81% of NBFC lending 8 . These include customer segments that are often not catered to by traditional banking channels like small and micro businesses, first time borrowers and borrowers from low-income groups and from economically weaker segments of the population.

SECTORAL CREDIT DEPLOYMENT BY NBFCs:

Indias policymakers and regulators have also recognised the increasing relevance of NBFCs as an alternative and complementary channel of credit delivery. Over the years, the regulatory approach has balanced a dual responsibility - preserving financial stability and prudential discipline, while simultaneously fostering innovation, inclusion, and sustainable growth. As NBFCs become more systemically important, expectations around governance standards, risk management practices, customer protection, and operational resilience have naturally risen as well.

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7 https://www.crisilratings.com/en/home/newsroom/press-releases/2025/11/aum-to-tick-up-steadily-for-nbfcs-cross-rs-50-lakh-crore-next-fiscal.html 8 https://www.rbi.org.in/Scripts/AnnualPublications.aspx?head=Trend+and+Progress+of+Banking+in+India

Within the broader NBFC universe, Upper Layer (UL) NBFCs are emerging as key beneficiaries of the ongoing cycle. Larger and well-capitalised institutions continue to gain market share, supported by stronger balance sheets, superior governance standards, diversified funding access, and greater ability to navigate evolving regulatory and macroeconomic conditions. Their scale and institutional capabilities position them favourably to consolidate share over the medium term. The Reserve Bank of India estimates that loans and advances of UL NBFCs grew 31% yoy in September 2025 compared to 16% growth in medium layer NBFCs, during the same period.

A key enabler of this transformation has been Indias rapidly evolving digital public infrastructure. Over the last decade, the country has built strong rails for financial inclusion. Jan Dhan has expanded access to bank accounts, Aadhaar has simplified identity verification, UPI has transformed digital payments, and the Account Aggregator framework has the potential to unlock consent-based cash flow data. Built on these public digital rails, NBFCs and microfinance institutions are increasingly able to extend formal financial services far beyond traditional branch-led distribution models.

Layered on top of this digital foundation, Artificial Intelligence (AI) is now adding another dimension of transformation across the NBFC ecosystem. AI-enabled systems are increasingly being deployed across the lending value chain to make customer interactions simpler, faster, and more responsive. Many institutions are leveraging AI to improve credit delivery, particularly for small businesses, informal enterprises, and first-time borrowers with limited formal credit histories. By analysing broader patterns in transaction behaviour, repayment flows, and business activity, AI is emerging as a powerful supplement to traditional underwriting methods and an important enabler of financial inclusion.

Beyond origination, AI is also being deployed for fraud detection, portfolio monitoring, collections optimisation, and enterprise risk management. Well-managed NBFCs are increasingly integrating AI-driven tools to strengthen operational efficiency while improving credit quality and customer experience. There is also a growing role for AI in compliance and supervision, where advanced analytical tools can process large volumes of information, identify anomalies, support early warning systems, and strengthen regulatory oversight.

Taken together, Indias structural credit gap, rising consumption potential, expanding digital infrastructure, and technological

transformation create a compelling long-term opportunity for the NBFC sector. Well-governed and adequately capitalised NBFCs - particularly leading Upper Layer institutions - are likely to play a central role in the next phase of Indias financial deepening and inclusive economic growth.

OPPORTUNITIES

Strong Structural Growth Opportunity Driven by Financial Inclusion and Rising Credit Demand

Financial inclusion in India is rising rapidly, supported by sustained public policy interventions and the emergence of new-age digital data platforms. Combined with a growing middle-income population and rising formalisation of the economy, credit demand across both retail and corporate borrowers is expected to expand significantly over the coming years.

At the same time, bank credit growth is expected to remain relatively moderated at around 12-13%, constrained in part by slower deposit mobilisation. This creates a natural opportunity for NBFCs to bridge the incremental credit gap. According to CRISIL estimates, NBFC credit is already expanding at approximately 18-19%, and with the sector accounting for only about one-fourth of overall lending, there remains substantial room for further scale-up and market penetration 10 .

Improved Balance Sheet Strength and Regulatory Oversight

Over the past few years, the Reserve Bank of Indias strengthened regulatory oversight and governance-focussed reforms have led to a meaningful improvement in the financial resilience of NBFCs, particularly those classified in the Upper Layer category. As per RBI estimates for September 2025, Upper Layer NBFCs reported a Capital to Risk-Weighted Assets Ratio (CRAR) of 20.3% and Gross NPA levels of only 3.1%, reflecting improved capitalisation and asset quality 11 .

These stronger balance sheets provide a robust foundation for well-managed NBFCs to support Indias growing credit requirements, especially in borrower segments that remain relatively underserved by traditional banks.

THREATS

High Dependence on Market Borrowings and Sensitivity to Liquidity Conditions

NBFCs remain significantly reliant on external borrowings and are therefore more sensitive to liquidity disruptions and interest rate volatility compared with traditional banks.

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As per RBI estimates, nearly 36.9% of NBFC liabilities are sourced from banks, while another 36% is raised through domestic debt markets. Although foreign borrowings are gradually increasing, they still account for only about 3.2% of total liabilities, while short-term borrowings contribute approximately 3.5% 12 .

This funding profile highlights the need for NBFCs to further diversify their liability base, reduce concentration risks, and build more stable long-term funding channels to enhance resilience across market cycles.

Exposure to External Economic and Geopolitical Risks

Recurring geopolitical tensions and global trade disruptions could adversely affect Indias ambitions of deeper integration with global supply chains. Such developments may disproportionately impact Indias micro, small, and medium enterprises (MSMEs), which account for nearly 46% of the countrys exports 13 .

Given that NBFCs serve as a major conduit of financing for this segment of corporate India, any prolonged slowdown in MSME activity could potentially weigh on credit growth, asset quality, and overall sectoral momentum.

COMPANY OVERVIEW

Piramal Finance Limited (PFL or the Company) is a retail-focussed, upper layer Non-Banking Financial Company (NBFC) registered with the Reserve Bank of India (RBI). Over the years, it has transformed into a diversified, multi-product, technology-led financial services platform with a simplified corporate structure, stronger balance sheet, and sharper strategic focus.

The Company serves over 5.7 million active customers, expanding access to affordable credit responsibly across Bharat while driving inclusive growth. Its strategy is anchored in scalable, technology-enabled, risk-calibrated businesses supported by disciplined portfolio management and continuous digital transformation. It operates a distinctive phygital model, combining high-touch engagement across 13,000+ pin codes with high-tech capabilities including machine learning models, agentic AI tools, and real-time dashboards.

Supported by an experienced management team, strong Board oversight and a robust governance framework, the Company is well-positioned to capture opportunities from Indias long-term growth in the formal financial services sector.

As on March 31, 2026, PFL managed Assets Under Management (AUM) of 1,01,230 crore through 701 branches across 568 cities in 26 states and union territories.

BUSINESS SEGMENTS

The Companys financial services portfolio is structured across four business verticals - Retail Lending, Wholesale Lending, Alternatives, and Life Insurance.

Retail Lending

Following the acquisition of Dewan Housing Finance Limited (DHFL) in 2021, PFL has built a housing-led, diversified retail lending franchise that operates on a High Tech and High Touch model, integrating digital capabilities, analytics, and AI-led processes with branch-led customer engagement to deliver a seamless borrower experience.

12 https://www.rbi.org.in/Scripts/AnnualPublications.aspx?head=Trend+and+Progress+of+Banking+in+India

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The retail franchise continues to scale through a granular, diversified portfolio strategy with a strong focus on secured lending, disciplined underwriting, calibrated risk management and operational agility. The Company is deepening its presence across underserved and underpenetrated markets through its branch network and technology-enabled operating model.

Product Offerings:

Mortgage: Housing Loans and Loan Against Property

Other Secured Loans : Used Car Loans and Gold Loans

Unsecured Loans: Salaried Personal Loans, Unsecured Business Loans, Rural Micro Loans, and Digital Loans (including Embedded Finance)

Retail AUM has grown nearly 4x to 85,885 crore in FY2026 from 21,552 crore in FY2022, now contributing 85% of Total AUM, supported by strong demand, distribution expansion, and a growing customer franchise. Disbursements increased 31% yoy to 43,275 crore in FY2026 from 32,996 crore in FY2025.

For more details, please refer to pages 32-48

Wholesale Lending

The Wholesale Lending business offers structured financing solutions to real estate developers and corporates across select sectors. The portfolio is built on calibrated growth, disciplined underwriting, sectoral diversification, and prudent risk management, with a clear focus on maintaining a balanced and de-risked book.

WHOLESALE 2.0 - Building a granular, resilient and diversified portfolio

The Company has transitioned to a more granular, resilient and diversified portfolio backed by cashflows and assets across Real Estate and Corporate & Mid-Market Lending (CMML). The strategy emphasises smaller ticket sizes, reduced concentration risk, diversification beyond real estate, strengthened due diligence and tighter collection and portfolio monitoring frameworks. This has resulted in improved portfolio quality and greater resilience across cycles.

Wholesale 2.0 AUM increased nearly 5x over three years to

12,538 crore in FY2026 from 2,792 crore in FY2023, and increased 38% yoy from 9,117 crore in FY2025, driven by a more diversified and risk-calibrated lending model.

For more details, please refer to pages 48- 53

LEGACY BUSINESS - Portfolio Rationalisation

The Company continues to systematically run-down its legacy portfolio as part of its transformation strategy, focussed on accelerated recoveries, capital preservation, and disciplined resolution.

Legacy AUM has declined 93% from 43,175 crore in FY2022 to 2,807 crore in FY2026, reflecting steady execution and improved portfolio quality. It now accounts for just 3% of Total AUM, down from 66% in FY2022, marking the completion of a major portfolio transition.

For more details, please refer to page 53

Alternatives

Piramal Alternatives is the fund management and fiduciary business of the Company, strengthened by long-term partnerships with marquee investors and a total committed capital of US$1.6 billion. The business focuses on optimising risk and returns across verticals it invests / operate, thereby placing it uniquely in terms of building India-focussed alternatives business across real assets, infrastructure, private equity, and private debt.

The business is led by an experienced team of senior professionals skilfully navigating investment complexities in India, offering capital and personalised solutions to high-quality corporates looking to maximise growth.

Key platforms under Piramal Alternatives include:

Piramal Credit Fund: A sector-agnostic performing credit fund backed by capital commitment from La Caisse (Caisse De Dépôt Et Placement Du Québec), targeting investments in mid- to large-sized corporates across sectors.

India Resurgence Fund (IndiaRF): A special situations fund established in partnership with Bain Capital Credit, focussed on control-driven investments targeting mid-sized Indian enterprises that are under-capitalised or facing operational stress, with the goal of unlocking equity value through significant transformation and positioning them for market-leading growth.

For more details, please refer to pages 53- 54

Life Insurance

Pramerica Life remained focussed on delivering calibrated, efficient and balanced growth during FY2026 in line with the Companys business and financial objectives. Individual New Business Premium grew 30% YoY during the year,

2.5x faster than the private industry growth of 12%, while pursuing calibrated growth in the Group business. On a comparable 3-year CAGR basis for FY2023-FY2026 total NBP, Pramerica grew at 28% versus 13% for the private industry and was the second fastest growing insurer among the top 20 Indian private life insurers.

FY26 also marked a year of multiple business milestones for Pramerica Life, with Individual APE, Group New Business Premium, Total New Business Premium, Renewal Premium, Value of New Business and Individual Claims Paid Ratio all reaching their highest-ever levels since inception. The Company continued to focus on driving long-term sustainable growth of the organisation while navigating the evolving business landscape through sustained emphasis on productivity improvement, cost discipline, quality of business, calibrated growth while operating within the existing capital, diversification across channels, lines of business and product mix, strengthening organisational capabilities and talent retention, and maintaining persistent focus towards compliance.

? 2,360 Cr

All-time high Gross Written Premium

During the year, PFL ofloaded its entire equity stake of 14.72% in Shriram Life Insurance Company to Sanlam Emerging Markets (Mauritius) Ltd (SEMM) for 600 crore. Incorporated in Mauritius, SEMM is a 100% subsidiary of Sanlam Emerging Markets Pty (Ltd) and is part of the Sanlam Group. The transaction is aligned with the Companys broader plan to monetise its non-core investments and

bolster the core business of lending, that is central to its long-term growth.

The transaction closed during the quarter-ended March 31, 2026. PFL continues to hold the 18% stake it held in Shriram General Insurance Company.

For more details, please refer to pages 54- 55

FINANCIAL ANALYSIS

Consolidated Statements

( Cr, unless specified)

Particulars FY2026 FY2025

Net Interest Income	4,731	3,591
Other Income	870	1,005
Total Income	5,601	4,596
Pre-Provision Operating Profit (PPOP)	2,294	1,582
PAT	1,506	485
EPS (Basic Per Share)	66.49	21.55
EPS (Diluted Per Share)	66.11	21.33
Net Worth	28,191	27,096
Gross Debt	79,945	65,484
Total Assets	1,08,136	92,580
Gross Debt to Equity Ratio (X)	2.8x	2.4x
Capital Adequacy Ratio (%)	19.8%	23.6%
Total AUM	1,01,230	80,689
Provision Coverage Ratio (%)	2.1%	2.8%
GNPA Ratio (%)	2.3%	2.8%
NNPA Ratio (%)	1.6%	1.9%

The Company delivered a Total Income of 5,601 crore in FY2026, up 22% yoy

Net Profit stood at 1,506 crore in FY2026 as compared to 485 crore in FY2025, marking a strong turnaround

EPS improved to 66.49 in FY2026 from 21.55 (basic) in FY2025, while diluted EPS was 66.11 in FY2026 from 21.33 (diluted) in FY2025, reflecting the success of strategic execution across businesses

As of March 31, 2026, the Company maintained strong capital adequacy ratio of 19.8%; and registered a healthy gross debt-to-equity ratio of 2.8x, up from 2.4X in FY2025, reinforcing the Companys position among Indias best-capitalised NBFCs

Asset quality remained stable with a GNPA of 2.3% and NNPA of 1.6%, compared to 2.8% and 1.9%, respectively in March 2025

For more details, please refer to pages 19-22 and 58- 65

COMPANY OUTLOOK FOR FY2027

~25%

Projected growth in AUM

~50%

Projected growth in Profit

~25%

Projected RoAUM

(Exit quarter - Q4FY27)

During the year, the Company completed its multi-year transformation and entered FY2027 with a stronger balance sheet, simplified structure, and sharper strategic focus.

Total AUM is expected to grow by ~25% yoy, led by increase in Growth AUM

Consolidated PAT is expected to grow by ~50% yoy, driven by earnings momentum in Growth business and value realisation from the balance sheet

RoAUM for exit quarter (i.e. Q4FY27) is expected to reach ~2.5%

The Company expects continued momentum in Growth business, supported by disciplined underwriting, strong capital position, operating leverage benefits, improving asset quality and a technology-led operating model. The focus remains on delivering sustainable growth with a balanced approach to scale, risk, and return.

HUMAN RESOURCES

The Company is committed to building a dynamic and inclusive workplace by attracting, developing and retaining top talent. It prioritises upskilling and leadership development to build a future-ready workforce aligned with evolving business needs.

Employees are equipped to drive long-term success through career growth opportunities, competitive rewards and a strong learning culture. The Company places strong emphasis on employee well-being, engagement and diversity, creating a high-performance workplace while enhancing operational efficiency and improving employee experience by leveraging digital solutions for human resource management. With a strong focus on agility and resilience, the Company drives sustained organisational growth. As of March 31, 2026, the Company had a workforce strength of 16,684 employees.

For more details, please refer to pages 79-85

RISK MANAGEMENT AND MITIGATION

The Companys Enterprise Risk Management (ERM) framework integrates the COSO model, focusing on proactive identification, assessment, and mitigation of key risks such as Credit Risk, ALM Risk, Operational Risk, Regulatory and other risks. The framework, governed by the Board of Directors and the Sustainability & Risk Management Committee (SRMC), ensures effective risk strategy implementation and alignment with its business objectives.

The Company maintains a robust risk control matrix and a Risk Appetite Framework (RAF) that defines its risk tolerance.

For more details, please refer to pages 123- 126

INTERNAL FINANCIAL CONTROLS

The Companys robust Internal Financial Control framework ensures financial accuracy, safeguards assets, prevents fraud and maintains regulatory compliance. The framework includes risk assessment, control activities and monitoring mechanisms, with oversight from the Board of Directors through the Audit Committee. Regular internal audits and risk-based reviews help identify control weaknesses and enables timely corrective actions.

The Company enforces stringent financial controls across all business processes, including revenue recognition, expense management, procurement and financial reporting. Technology-driven solutions enhance accuracy and efficiency, reinforcing transparency, accountability and long-term financial stability while ensuring compliance with regulatory standards.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The internal audit function plays a crucial role in strengthening organisational resilience by identifying potential risks and evaluating mitigation strategies. The Companys operational effectiveness of internal controls, risk management practices andgovernancesystemsarereflectedinmeasuresimplemented by management, ensuring compliance, mitigate risks and enhance overall organisational stability. Insights gained from audits conducted across business lines, including retail branch network audits, centralised audits, business audits, concurrent audits and special reviews, enable the management enhance adherence to policies, processes and regulatory guidelines, while strengthening the overall control environment. Audit findings are regularly shared with senior leadership, enabling proactive decision-making and continuous improvements in risk management and governance frameworks.

For more details, please refer to page 127