With Piramal Enterprises Limited (PEL) demerging its pharma business, the stock commenced ex-pharma trading on Tuesday, August 30, 2022. The company fixed September 1 as the record date for the demerger of Piramal Pharma. Each PEL shareholder will get 4 shares of Piramal Pharma on the record date, which will be listed by October/November (60-90 days from NCLT approval) according to the company.
The equity shares proposed to be allotted by PPL (Piramal Pharma Limited) are expected to be listed on stock exchanges in the next 2-3 months, subject to necessary regulatory approvals. Last month, the National Company Law Tribunal (NCLT) had approved the demerger of the pharma business of Piramal Enterprises and simplification of the company’s corporate structure.
“We maintain buy and reset our target price for Shares of Piramal Enterprises To 1,250 each based on SOTP evaluation of PEL after demerger. The pickup in retail disbursements, especially in housing, should lift credit growth. Provisions may remain high in the near term as PEL tries to open its wholesale books, but recovery from POCI book should mitigate the impact. With Lending Book trading at 0.7x FY23e BV, risk/reward looks positive,” said global brokerage Jefferies.
Under the demerger scheme, the company stated that four fully paid-up equity shares of PPL 10 each will be issued to PEL shareholders for each fully paid-up equity share in PEL whose face value 2 each held by them.
“We value PEL’s financial services business (factoring of demerger of pharma business): 332 billion or 1,391 per share and Buy Maintain,” said brokerage ICICI Securities, adding that PEL has outlined its 5-year aspirations, with a target of doubling AUM in 5 years by 2027, at 40-50% CAGR in 5 years Increase retail distribution, and take retail share to ~60-70% of total portfolio mix.
PEL to slightly exceed its retail distribution target: 25-35 billion in 3QFY23, but longer-term housing loan scale will be the key to book growth. Jefferies’ note said housing distribution picked up in 1Q and should continue to grow, led by improved productivity in DHFL’s branch and branch expansion.
The views and recommendations given above are those of individual analysts or broking companies and not of Mint.
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