Motilal Oswal - Piramal Enterprises Ltd. (PEL) MOSL: PIRAMAL ENTERPRISES: Retail gaining momentum, slippages continue in Wholesale; intermittent constraints in Pharma

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Motilal Oswal

Abhijit Tibrewal

EUR 120.00 For Business Accounts Only

MOSL: PIRAMAL ENTERPRISES: Retail gaining momentum, slippages continue in Wholesale; intermittent constraints in Pharma

PIRAMAL ENTERPRISES: Retail gaining momentum, slippages continue in Wholesale; intermittent constraints in Pharma

(PIEL IN, Mkt Cap USD5.3b, CMP INR1773, TP INR2200, 24% Upside, Buy

PIEL reported a consolidated PAT of ~INR4.9b in 1QFY23 (PY: INR5.3b). Revenue grew by ~22% YoY to INR35.5b in 1QFY23 (PY: INR29.1b).

AUM in Financial Services (FS) grew 37% YoY to ~INR646b, while Retail loans grew over 4x to ~INR223b. The share of the Retail book rose to 37% (PY: 12%) primarily through the DHFL acquisition in Sep’21.
Pharma sales rose 9% YoY to INR14.9b (inline) in 1QFY23, led by sustained momentum in the India Consumer Product (ICP) segment. The CDMO and Complex Hospital Generics (CHGs) business experienced temporary challenges in 1QFY23, impacting performance to some extent.
PCHFL will now have to scale up DHFL’s Mortgage franchise and leverage the platform to cross-sell other Retail products to its customer pool. PIEL recently launched its Microfinance (MF) business and will soon start offering salaried Personal loans (PL).
It has increased ECL provisions to 6.2% (PQ: 5.7%) to account for slippages of two large Wholesale accounts into Stage 2. It will be prudent to take a deep dive into the Wholesale loan book, recognize any stressed loans, and make adequate provisioning before it starts trading as a pure-play NBFC. We estimate ~17% loan book CAGR over FY22-24, incorporating consolidation in the Wholesale book over the next one year. We maintain our Buy rating with a revised TP of INR2,200 (FY24E SoTP-based).

01/08/2022 14 EN

Underlying

Piramal Enterprises Ltd.

Piramal Enterprises is a pharmaceutical group based in India. Co. is engaged in the production, packaging, marketing, sale, import, and export of pharmaceutical products in the form of tablets, capsules, liquids, powders, creams, ointments, granules and bulk drug. Co. is engaged in the manufacture of glass containers. Co.'s brands include Phensedyl, Haemaccel, Stemetil, Paraxin, Phenergan, Gardenal, Pentids, Tixylix, Supradyn and Tenormin. Co. maintains over 295 issued patents plus 808 pending patent applications, spread across categories such as compositions of matter, methods of treatments, biomarkers, diagnostics, pharmaceutical compositions and drug delivery systems.

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INE140A01024 National Stock Exchange of India India

Provider

Motilal Oswal

Motilal Oswal Financial Services Ltd. is a reputed name in Financial Services and Online Trading with group companies providing services such as Private Wealth Management, Retail Broking and Distribution, Institutional Broking, Asset Management, Investment Banking, Private Equity, Commodity Broking, Currency Broking, Principal Strategies & Home Finance.

Motilal Oswal Securities is a group company of Motilal Oswal Financial Service Limited which started as a stock trading company and has blossomed into well diversified firm offering a range of financial products and services. Motilal Oswal has built a reputation as the source for best stock trading company and this has taken a wealth of experience, knowledge and expertise, constantly working in tandem, over the years.

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Analysts

Abhijit Tibrewal

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MOSL: PIRAMAL ENTERPRISES: Retail gaining momentum, slippages continue in Wholesale; intermittent constraints in Pharma

Increased risk weighs on PIRAMAL ENTERPRISES, penalising its rating down to Slightly Negative

Piramal Enterprises Limited: 3 directors

MOSL : HOME FIRST FINANCE COMPANY: Earnings in-line with sustained improvement in asset quality

MOSL : SHOPPERS STOP: Ticking the right boxes

MOSL : ERIS LIFESCIENCES: Enhanced efforts toward product launch-related activities

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