Analysts maintained their positive view of Piramal Enterprises citing a positive risk-to-reward ratio after the company demerged its pharmaceutical business. The company had fixed September 1, 2022 as the demerger of Piramal Pharma record date.
While retaining its bullish view on Piramal Enterprises post demerger, ICICI Securities said that lending business with FY22 allocated net worth of Rs 17,000 crore will generate RoE of 8-9 per cent over FY23-24E and can command multiple of 1.15 times book. It also added that investments in Shriram Group have been valued at Rs 5,500 crore or Rs 230 per share.
“We value Piramal Enterprises financial services business (factoring demerger of pharma business) at Rs 33,200 crore or Rs 1,391 per share,” ICICI Securities said adding it assigned Rs 3,800 crore, or Rs 161 per share, for unallocated equity, alternatives and life insurance.
Adjusted share price Piramal Enterprises traded 1.41 per cent higher at Rs 1,042.55 in the morning trade on September 2. On the other hand, the benchmark BSE Sensex was down nearly 33 points, or 0.06 per cent, at 58,733.
Market watchers believe that equity shares, proposed to be allotted by PPL (Piramal Pharma Limited), are expected to be listed on stock exchanges over the next 2-3 months, subject to necessary regulatory approvals. Each Piramal Enterprises shareholder will get 4 shares of Piramal Pharma.
On the other hand, global brokerage firm Jefferies is also positive on Piramal Enterprises with a target price of Rs 1,250. “Pickup in retail disbursements, especially in housing should lift loan growth. Provisions could stay elevated near term as Piramal Enterprises tries to unwind its wholesale book, but recoveries from the POCI book should cushion the impact. With lending book trading at 0.7 times FY23E BV, risk/reward seems positive,” Jefferies said.
Piramal Enterprises has also outlined its 5-year aspirations wherein it is targeting to double assets under management (AUM) in 5 years until 2027, grow retail disbursements at 40-50 per cent CAGR over 5 years and take retail share in total portfolio mix to around 60-70 per cent. In terms of leverage, it will further optimise capital utilisation and target net debt-to-equity of 3.5-4.5 times.
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