Equity shares, proposed to be allotted by PPL (Piramal Pharma Limited), are expected to be listed on stock exchanges over the next 2-3 months, subject to necessary regulatory approvals. Last month, the National Company Law Tribunal (NCLT) approved the demerger of Piramal Enterprises’ Pharma business and the simplification of the company’s corporate structure.
“We retain buy and reset our target price for Piramal Enterprises shares to ₹1,250 apiece based on SOTP valuation of PEL post demerger. Pickup in retail disbursements, esp in housing, should lift loan growth. Provisions could stay elevated near term as PEL tries to unwind its wholesale book, but recoveries from POCI book should cushion the impact. With lending book trading at 0.7x FY23e BV, risk/reward seems positive," said global brokerage Jefferies.
Under the demerger scheme, the company said four fully paid-up equity shares of PPL of ₹10 each to be issued to PEL shareholders for every one fully paid-up equity share in PEL with face value of ₹2 each held by them.
“We value PEL’s financial services business (factoring demerger of pharma business) at ₹332 bn or ₹1,391 per share and maintain Buy," said brokerage ICICI Securities, adding that PEL has outlined its 5-year aspirations wherein it is targeting to double AUM in 5 years until 2027, grow retail disbursements at 40-50% CAGR over 5 years, and take retail share in total portfolio mix to ~60-70%.
PEL should slightly exceed its retail disbursement target of ₹25-35 bn in 3QFY23, but scale up of longer tenure housing loans will be the key to book growth. Housing disbursements picked up in 1Q and should ramp up further, led by better productivity at DHFL's branches and branch expansions, Jefferies' note added.
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