MOSL: PIRAMAL ENTERPRISES (Buy)-Retail housing finance scaling up; one-time loss on sale of subsidiary
Piramal Enterprises: Retail housing finance scaling up; one-time loss on sale of subsidiary
(PIEL IN,Mkt Cap USD7.1b, CMP INR2664, TP INR3125, 17% Upside, Buy)
- Piramal Enterprises’ (PIEL) 1QFY19 adjusted PAT grew 27% YoY to INR3.8b. However, due to an INR4.5b loss on sale of its subsidiary, Piramal Imaging SA, the company reported a consolidated net loss of INR698m.
- Financial Services – The loan book grew in line with trend at 64% YoY to reach INR470b. The share of real estate lending continues to decline, while that of corporate lending and retail housing finance is on the rise. NIM for 1QFY19 at 7.1% was 60bp lower than that for FY18. As a result, RoA for 1QFY19 was 30bp lower than that for FY18 at 3.6%. RoE for the quarter was 17%. The performance on the RoA/RoE front is a tad below our expectations. However, the GNPL ratio remains stable at 30bp, while total provisioning on the balance sheet is unchanged at 1.8%.
- Pharma Services – Global pharma revenue grew 16% YoY to INR9.8b. EBITDA margin, however, shrank 300bp YoY to 20% in 1QFY19, primarily due to a change in revenue mix (high growth from service business). Going forward, PIEL expects margin to improve to ~25%.
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.
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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