Piramal Enterprises Ltd. share price target

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 Ltd is in the Pharmaceuticals sector, having a market capitalization of Rs. 53,501.22...

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.

Piramal Enterprises Ltd Q3FY18 results comment Revenue grew by 12.72% to Rs. 2858.36 Cr in Q3FY18 when compared to the previous quarter

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.