Motilal Oswal is bullish on Piramal Enterprises has recommended buy rating on the stock with a target price of Rs 2775 in its research report dated January 28, 2019.
Motilal Oswal's research report on Piramal Enterprises
Piramal Enterprises’ (PIEL) 3QFY19 PAT grew 23% YoY to INR6.0b, in keeping with the trend of the past few quarters. Although growth in the Financial Services (FS) business slowed down incrementally, it is commendable against the backdrop of the tough liquidity situation of the past quarter. PIEL raised INR100b in the form of term loans and NCDs during the quarter, and also reduced the share of CPs outstanding from 18% to 15% sequentially. Financial Services: Loan book growth moderated to 5% QoQ/45% YoY, which is commendable in this environment. The share of the real estate loan book stands at 69%. PIEL continues scaling up its retail housing loan book well – now at close to INR40b. Margins, however, continue contracting from 8.0% in 3QFY18 and 6.9% in 2QFY19 to 6.6% in 2QFY19. Asset quality remains stable, with a GNPL ratio of 50bp.
Key risk to our estimates could stem from any change in regulatory norms for NBFCs and large default in real estate financing, if any. Our Dec’20E SOTP-based target price stands at INR2,775. Maintain Buy.
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