Piramal Enterprises’ (PIEL) 1QFY19 adjusted PAT grew 27% YoY to INR3.8b. However, due to an INR4.5b loss on sale of its subsidiary, Piramal Imaging SA, the company reported a consolidated net loss of INR698m. Financial Services – The loan book grew in line with trend at 64% YoY to reach INR470b. The share of real estate lending continues to decline, while that of corporate lending and retail housing finance is on the rise. NIM for 1QFY19 at 7.1% was 60bp lower than that for FY18. As a result, RoA for 1QFY19 was 30bp lower than that for FY18 at 3.6%. RoE for the quarter was 17%. The performance on the RoA/RoE front is a tad below our expectations.
OutlookHowever, the GNPL ratio remains stable at 30bp, while total provisioning on the balance sheet is unchanged at 1.8%. Hence, we cut our FY20E EPS estimate by 11% due to lower-than-expected profitability in the pharma and IT segments. Our FY20 SOTP based TP is INR3,125. Buy.
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