Chairman of Piramal Healthcare, Ajay Piramal says that the Indian telecom story is still very positive and the growth is likely to continue.
Chairman of Piramal Healthcare , Ajay Piramal says that the Indian telecom story is still very positive and the growth is likely to continue.
Speaking exclusively to CNBC-TV18’s Sajeet Manghat, Piramal says that this expectation of growth and the fact that Vodafone is a world class company is what compelled them to increase their stake in the telecom service provider.
“As an investor, we have a seat on the board along with which we will have all the regulatory rights that a person on the board has,” said Piramal, speaking about the investor rights Piramal Healthcare will have with regards to Vodafone. He goes on to say that he expects to see 17-20% return on investment.
Below is an edited transcript of his interview. Also watch the accompanying video.
Piramal: We've acquired 11% of the equity for Rs 6000 crore, the valuation is the usual valuation that you look at a company that you think about the future prospects and how its performed in the past.
Q: If you compare this valuation with other companies in the market, what is the kind of discount or premium you have got?
A: Vodafone is a private company, the numbers are not known and therefore I am not in a position to share those with the press at the moment. I can only say that this is the investment that we have made in it.
Q: Going forward what is the kind of exit options which you have as investor in Vodafone?
A: As an investor in Vodafone we have the option to exit through an IPO or we have the option for Vodafone PLC to acquire our stake in Vodafone India or sell it to a third party. Of course this is all subject to what the market conditions and regulatory approvals are.
Even we bought this stake from a third party, an Indian entity has sold to another Indian entity, so similarly we can do that.
Q: What are the shareholder rights that are available to you as an investor?
A: Today as an investor we have a seat on the board from now onwards and we will have all the regulatory, all the standard sort of investor rights when you have a person on the board.
Q: You mentioned that you look at a return of 17-20% on your investment. So is it fair to say that in the next 24 months you expect the valuation of Vodafone to be between USD 13-14 billion?
A: As I said and as you have also said, in the next 24 months we expect that return of 17-20 %. So you can calculate what valuation would be.
Q: Do you think that telecom is a nice big bet or is great bet to get returns?
A: We believe that the India telecom story is still very positive; it is a growing market and it will continue to grow. Secondly, we want to have relationships with only world class companies and that is what Vodafone PLC and therefore Vodafone India is. We are reasonably confident that we should get this return.
Piramal Enter stock price
On October 30, 2014, Piramal Enterprises closed at Rs 781.05, up Rs 12.35, or 1.61 percent. The 52-week high of the share was Rs 835.00 and the 52-week low was Rs 482.65.
The company's trailing 12-month (TTM) EPS was at Rs 130.67 per share as per the quarter ended September 2014. The stock's price-to-earnings (P/E) ratio was 5.98. The latest book value of the company is Rs 528.91 per share. At current value, the price-to-book value of the company is 1.48.
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