Piramal Enterprises Q1 Review - Wholesale Run-Down Positive, But Transient Impact On Revenue: Motilal Oswal

Motilal Oswal Report

Over the past two years, Piramal Enterprises Ltd. has strengthened its balance sheet by running down its wholesale loan book; improved texture of its borrowings (driving lower cost of borrowings); and fortified itself against contingencies with expected credit loss provisions at 4.4% of assets under management.

Over the next two years, we expect Piramal Enterprises to make meaningful inroads into retail, led by mortgages/loan against property and complemented by a good mix of unsecured loans.

Product diversification within retail will help Piramal Enterprises deliver strong growth and reduce concentration risks. We expect the company to deliver ~2.1% return on asset and 6.3% return on equity in FY25E.

We acknowledge that Piramal Enterprises possesses pockets of value:

1. deferred tax assets relating to the time of DHFL acquisition,

2. potential recoveries from written-off exposures, and

3. fee income levers that it can leverage to enhance profitability.

We have a target multiple of 0.9 times price/book value for the lending business. We reiterate our 'Buy' rating on the stock with a target price of Rs 1,260 (premised on March-25 SoTP).

Click on the attachment to read the full report:

DISCLAIMER

This report is authored by an external party. BQ Prime does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of BQ Prime.

Users have no license to copy, modify, or distribute the content without permission of the Original Owner.