Motilal Oswal's research report on Piramal Enterprises
We interacted with the senior management team of Piramal Enterprises (PIEL), represented by Mr. Jairam Sridharan, CEO of Retail Lending and MD of Piramal Finance, to gain insights into the company's future growth plans and other strategic developments. The key takeaways from our discussion are outlined below. PIEL is now more confident about its Retail business strategy and has emphasized that legacy challenges are largely behind. The company plans to further reduce its legacy wholesale loan book from INR70b to INR35-40b, over the next one year, without any impact on its net worth. Additionally, it expects to receive a deferred consideration of USD120m from the sale of Piramal Imaging within the next 3-6 months. This, along with recoveries from its AIF, will further improve the company’s ability to accelerate the run-down of the legacy AUM.
Outlook
While we anticipate greater earnings stability and an improved outlook going forward, its return metrics remain modest, with RoA and RoE estimated at 1.9% and 8%, respectively, for FY27E. We value the lending business at 0.8x FY27E P/BV. Reiterate our Neutral rating on the stock with a revised TP of INR1,250 (premised on Mar’27 SOTP).
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