The 4 reports from 1 analysts offering long term price targets
for Piramal Enterprises Ltd. have an average target of 2170.00. The consensus estimate
represents an upside of 13.10%
from the last price of 1918.70.
The Complex Hospital Generics (CHG) business was volatile due to COVID in 3QFY21. On the other hand, the Contract Dev. and Manufacturing Org. (CDMO; led by a strong order book) / India Consumer business (led by increased demand for Self-Care and Baby Care products) has been steady. As the Carlyle deal commenced in Oct'20, the consol. networth jumped from INR315b to INR355b QoQ. The equity infusion was used to primarily pare down debt consol. net debt/equity ratio is at a multi-year low of 0.9x. After a lackluster 1HFY21, the Real Estate segment rebounded in 3QFY21...
Four products launched; INR500m disbursements in the first month The company launched four retail lending products in Nov'20 LAP, affordable housing finance, mass housing finance, and small business loans (refer Exhibit 1). It also plans to reduce the focus on affluent housing finance. The idea is to have products that banks typically do not focus on and where NBFCs have higher pricing power due to their niche capabilities. PIEL is currently present in 40 locations (14 hub and 26 spoke locations), with an employee strength of over 400 people. Half of its employees are frontline sales persons. In the first month, it disbursed INR500m across these four products....
The EBITDA margin contracted considerably to 11% in the quarter (from 21% in FY20) due to lower revenue from Complex Hospital Generics and The deferment of surgeries in the Hospital segment impacted overall performance in PIELs Pharma segment. However, the phase-wise easing of the lockdown is improving the outlook across the CDMO and Complex The company will roll out retail lending products such as LAP and small business loans around the Diwali festival in 1520 towns. The Pharma business is witnessing increased traction, and the recent stake sale has set a benchmark for its valuation. INR34b of the INR37b Pharma stake sale to Carlyle would go back to PIEL. While PIELs Pharma business was impacted by COVID-19, management indicated U-shaped recovery over the next two to three quarters. We keep credit costs elevated over the next two years The Pharma business is witnessing increased traction.
28 June 2020 PIEL has announced that all Pharma related businesses at the group level would be merged into a wholly-owned subsidiary, Piramal Pharma Ltd (PPL). Further, PPL would get strategic growth investment from the Carlyle group for 20% equity stake in the company. EV for the proposed transaction is USD2.8b with an upside of USD360m if PPL achieves certain financial parameters in FY21. According to the manegement, PIEL would utilize part of the stake sale money to reduce net debt to INR25b from INR42b and the rest could be utilized for inorganic opportunities. With EV of USD2.8b (INR210b) and debt reduction to INR25b, the equity value works out to INR185b with a realized upside value of INR212b (USD360m). Accordingly, Carlyle would invest USD490m for the proposed 20% stake and an additional USD72m if the upside is triggered. Piramal Enterprises Consolidated leverage declined from 2.1x in FY19 to 1.4x in FY20. Leverage of the FS business declined from 3.9x to 2.
23 October 2019 Piramal Enterprises (PIEL) PBT increased 29% YoY to INR7.3b in 2QFY20. However, with a tax rate of 36%, the company has not availed of the tax rate reduction this quarter. Net income (calc.) declined 7% QoQ to INR7.6b. Total equity in FS (ex Shriram Group) stands at INR143b. Debt to equity of FS declined to 2.9x versus 3.8x a quarter ago. Pharma revenue grew 17% YoY to INR13.2b. EBITDA margin improved to 24% from 22% a year ago. In the current environment, PIEL has focused on (a) reducing the top 10 exposures from INR140b to INR100b by Mar 20, (b) lowering the share of short-term borrowings and (c) diversifying the loan mix towards retail assets.
Given the ongoing growth momentum and upside potential, we rate the stock a BUY with a target price of Rs. 2,119 based on SOTP valuation. Financial Services perform well despite challenging environment Company reported strong topline growth in Q1FY20 (+20.8% YoY to Rs. 3506cr). Growth is primarily led by robust performance in Financial Services division (+29.2% YoY to Rs. 2,014cr), despite liquidity tightening in the NBFC space and overall slowdown across sectors. Total loan book rose 20.2% YoY to Rs. 56,605cr, while gross NPA ratio stood at 0.9% (63% QoQ decline in stage 2 assets), maintaining healthy asset...
Piramal Enterprises (PIEL) reported 1QFY20 PAT of INR4.5b (core PBT up 20% YoY). The quarter was characterized by a moderation in loan growth (flat QoQ and 20% YoY v/s 30%+ earlier), an improvement in asset quality (GNPA flat QoQ; stage 2 loans down to 0.5% from 1.5% in 4Q) and an expansion in the Pharma EBITDA margin to 22% (+200bp YoY). Financial Services: Loan book was stable QoQ at INR566b. Retail housing book grew 18% QoQ to INR61b and accounts for 11% of total loan book (v/s 9% QoQ). Real estate/corp. fin loan book declined 1%/4% QoQ....
Piramal Enterprises (PIEL) 3QFY19 PAT grew 23% YoY to INR6.0b, in keeping with the trend of the past few quarters. Although growth in the Financial Services (FS) business slowed down incrementally, it is commendable against the backdrop of the tough liquidity situation of the 28 January 2019 past quarter. PIEL raised INR100b in the form of term loans and NCDs during the quarter, and also reduced the share of CPs outstanding from 18% to 15% sequentially. Loan book growth moderated to 5% QoQ/45% YoY, which is commendable in this environment. The share of the real estate loan book stands at 69%. PIEL continues scaling up its retail housing loan book well now at close to INR40b. The healthcare business delivered a healthy performance in the quarter, with overall growth of 8% YoY. Growth was largely led by Global Pharma segment (~14% YoY to INR10.6b), partially offset by the muted performance in the India consumer segment.
14 November 2018 Within a year of launch, PIEL has scaled up its loan book to INR23b, i.e. 4% of total loans. There would be some margin impact on the overall book due to the rising share of home loans. Over the past four quarters, net interest margin for the lending business has declined by 100+bp to 6.9% as the competitive environment has heated up. With the competitive scenario now benign, price wars in the wholesale finance segment have abated. However, Piramal Enterprises PIEL has the distinction of being one of the few companies in India to generate 25%+ book value CAGR over the past 25+ years. We believe the company has the DNA to incubate and grow businesses in niche segments. With a large product suite, huge growth opportunity and a focused team, the overall financial services business will continue to grow at a robust pace and generate 20%+ RoE, in our view.
Piramal Enterprises (PIEL) hosted an analyst meet to discuss its Financial Services business in detail. Management believes that opportunities in corporate lending are aplenty, given that most public sector banks and some private sector banks are not so active in this space. Hence, while bulk of its loan book (~75%) is wholesale real estate lending, management expects the share of non-real estate corporate lending to expand meaningfully over the next three years. Before investing/lending in any segment, the company does a deep study of the sector, which usually takes around six months. To the company's advantage, several...
PBT grew 16% YoY to INR4.7b. However, a DTA benefit (on account of reverse merger of subsidiaries) of INR35b led to PAT of INR39b in the quarter. During the quarter, PIEL merged all its lending subsidiaries into one, namely, Piramal Capital & Housing Finance Ltd. This would help the 28 May 2018 company diversify its borrowing profile, and thus, lower its cost of funds. The loan book continues growing at a rapid pace (+69% YoY to INR422b). With incremental disbursements in relatively safer segments, yield on loans declined 50bp QoQ to 14.8%. Likewise, cost of funds declined 20bp QoQ to 8.4%. RoA, on a QoQ basis, declined 100bp to 3.1% we await clarification from management. Revenue grew 10% YoY to INR13.6b.
FY18 is likely to be another strong year for Piramal Enterprises (PIEL). In 1HFY18, the loan book grew ~70% YoY driven by all segments, especially non-real estate corporate financing. The healthcare business too witnessed improving traction. Consolidated PAT was up 28% YoY in 1HFY18. We expect 2HFY18 to be as strong, with 28% PAT YoY growth to INR9.5b. On account of a strong growth outlook for FY19 and FY20 (35% CAGR in our view), PIEL recently raised INR50b via Compulsorily Convertible Debentures (CCDs) and also plans to raise additional INR20b via rights issue, of which the promoters have agreed to underwrite 90%. We believe much of this capital will be used to support growth in the financing business.
Piramal Enterprises (PIEL) hosted a conference call to discuss the launch of its housing finance business. The call revolved around the strategy, competitive positioning and outlook for this segment. Post the receipt of the HFC license in the first week of September, PIEL is off to a good start, driven by its B2B2C' strategy, i.e. reaching out to home buyers in projects...
