Buy Piramal Enterprises; target of Rs 1000: Motilal Oswal

Motilal Oswal is bullish on Piramal Enterprises recommended buy rating on the stock with a target price of Rs 1000 in its research report dated May 07, 2023.

Broker Research

May 09, 2023 / 13:42 IST

Buy

26 Aug, 2025 12:21

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Motilal Oswal's research report on Piramal Enterprises

PIEL reported a net loss of ~INR2b in 4QFY23 (PY: Net loss of ~INR450m) on account of 1) MtM loss of ~INR3.8b on Shriram investments and 2) a 52% YoY jump in opex to ~INR6.7b. FY23 PAT grew 5% YoY to INR19b (excluding exceptional gain of ~INR80b pertaining to demerger). NII declined 18% YoY/11% QoQ to INR9.2b because of lower interest income accretion, driven by the rundown in the wholesale book. Reported credit costs declined to ~INR3b in 4QFY23 (PQ: ~INR15.4b). Writeoffs in 4QFY23 stood at INR6.44b (PQ: INR7.7b). Total ECL provisions declined by ~380bp QoQ to 6.2% of AUM (PQ: 10%). Wholesale AUM declined 16% YoY to ~INR319b, while Wholesale 1.0 AUM declined 33% YoY to ~INR291b. The management seemed committed to running down the stressed wholesale exposures through monetization of exposures, one-time settlements and portfolio sales to ARCs for cash or security receipts (SRs). More importantly, the management sounded confident that the realization from resolution of stressed exposures should not result in any significant additional credit costs in the quarters ahead.

Outlook

We estimate a ~19% AUM CAGR over FY23-25, including further moderation in the Wholesale book and a 42% CAGR in Retail AUM over the same period. With a high capital adequacy of 31% and proceeds from a potential stake sale in Shriram Finance later this year, PIEL will have its task cut out to decide whether to utilize the excess capital on the balance sheet for any inorganic opportunities or find means to return it to shareholders. Retain BUY with a TP of INR1,000 (premised on Mar’25E SoTP).

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