Motilal Oswal - Piramal Enterprises Ltd. (PEL) MOSL: PIRAMAL ENTERPRISES (Buy)-Loan growth, margins under some pressure

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Motilal Oswal

Alpesh Mehta

EUR 120.00 For Business Accounts Only

MOSL: PIRAMAL ENTERPRISES (Buy)-Loan growth, margins under some pressure

PIRAMAL ENTERPRISES: Loan growth, margins under some pressure

(PIEL IN, Mkt Cap USD6.3b, CMP INR2410, TP INR2974, 23% Upside, Buy)

Piramal Enterprises (PIEL) reported 4QFY19 PAT of INR4.6b (core PBT up 22% YoY). The quarter was characterized by a moderation in loan growth and a marginal deterioration in asset quality.
Financial Services: Loan book growth moderated to 2% QoQ/34% YoY, below the historical trend. The share of the real estate loan book continued declining and stood at 71% as of FY19. The retail housing finance segment continues expanding – the loan book stands at INR52b. However, margins shrank 20bp QoQ as the company increased its share of long-term borrowings. However, management has guided for an improvement in margins in FY20. During the quarter, three accounts slipped into NPL, while the company made two recoveries – overall, the GNPL ratio increased by 40bp to 0.9%. Management mentioned that 18 accounts, amounting to INR23b, are at the risk of slippage and have been classified as Stage 3. PIEL has taken certain steps like bringing a joint developer, taking additional security, etc. for these accounts.
Pharma Services: The healthcare business delivered a healthy performance in the quarter, with overall growth of 8% YoY. Growth was largely led by Global Pharma segment (~12% YoY to INR13.9b), partially offset by the muted performance in the India consumer segment. Global Pharma segment EBITDA margin improved 100bp YoY to 23% in FY19.

30/04/2019 1 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

Alpesh Mehta

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MOSL: PIRAMAL ENTERPRISES (Buy)-Loan growth, margins under some pressure

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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