Piramal Enterprises, which has interests in financials and pharma, reported a 7.71 per cent rise in consolidated net profit at Rs 533.79 crore for the June quarter compared with Rs 495.56 crore reported for the same quarter last year. Revenues from operations fell to Rs 2,908.68 crore from Rs 2,937.34 crore YoY.
Analysts said the company’s financial segment performance was on the expected lines, with a drop in loan book, but asset quality was largely stable. In the case of the pharma segment, revenue growth was strong at 31 per cent, with FY22 sales guidance raised to 20 per cent.
They said the company’s acquisition of DHFL will help it transform from a wholesale-led to a well-diversified financial services business. The pharma segment, they said, would continue to clock healthy growth.
Piramal plans to create two listed entities out of financial services and pharma segments. But for now, its immediate focus will be to effectively integrate DHFL with self.
Axis Securities has raised its price target for the stock to Rs 3,100 from Rs 2,340 earlier, assigning a value of Rs 1,474 per share (from Rs 930) to the financial services business and Rs 1,040 per share (from Rs 880) to the pharma business. It assigned Rs 241 per share value to stake in Shriram Capital and Rs 59 to stake in
.
Citi has upped its target on the stock to Rs 3,100 from Rs 2,640. Motilal Oswal Securities has the same target.
On Monday, the stock traded at Rs 2,793, up 112 per cent from January 29’s closing of Rs 1,311.
Analysts said Piramal Enterprises had several factors that supported its share price in the past six months, including the robust performance of the pharma business.
In the financial segment, the successful consolidation of wholesale mortgage book, reduction in concentration risk, appropriate address of stress exposures, containing stage-3 pool and maintenance of better-than-expected credit cost in the financial segment also supported the stock, they said.
The company’s transition into a diversified NBFC, build-up of organic retail portfolio and successful bidding for DHFL have also helped improve the outlook, they said.
“Improving visibility towards building a diversified book (through DHFL acquisition), coupled with stable stress in the wholesale segment has triggered re-rating of financial services business. We expect this business to now command 1.5 times FY23 book. The pharma business will command 16 times EV/Ebitda and 4.5 EV/sales. This along with the value of its stake in Shriram group and unallocated equity value gives us a fair value of Rs 2,797 against Rs2,230 earlier,” ICICI Securities said.
The brokerage said risks persist with respect to deferment of DHFL’s integration, integration uncertainties and challenges including higher mark-downs and effectively leveraging the acquired network to cross-sell existing retail products.
Motilal has raised its EV/Ebitda multiple for the pharma business to 19 times from 17 times earlier) and P/BV multiple for the financial services business to 1.8 times from 1 time earlier.
“The management shared some finer details on the contours of the DHFL integration and on its ongoing preparations to leverage the DHFL branch/customer network. We await the completion of the acquisition before incorporating this in our estimates,” it said.
