The shares of a leading diversified Non-Banking Financial Company (NBFC) registered with RBI with a presence across retail lending, wholesale lending, and fund-based platforms are in focus after investing Rs. 1,000 crores in its wholly-owned subsidiary.
With a market cap of Rs. 24,937.8 crores, the shares of Piramal Enterprises Limited were trading in the green at Rs. 1,106, up by around 0.3 percent, as against its previous closing price of Rs. 1,102.55.
What’s the news
Piramal Enterprises has invested Rs. 1,000 crores in its wholly-owned subsidiary, Piramal Capital & Housing Finance Limited (PCHFL), a wholly owned subsidiary of the company by way of subscription to the rights issue.
According to the latest regulatory filings with the stock exchanges, the investment will be utilized by PCHFL for business or general corporate purposes.
The shareholding percentage of Piramal Enterprises in PCHFL remains unchanged following this investment. Since the transaction is between the holding company and its wholly-owned subsidiary, it falls outside the scope of related party transactions.
PCHFL reported turnovers of Rs. 6,03,861 lakhs, Rs. 6,59,178 lakhs, and Rs. 6,66,356 lakhs for FY22, FY23, and FY24, respectively.
Management Guidance
Piramal Enterprises has provided medium-term growth guidance of 25-26 percent CAGR for FY27, based on FY24 levels, with expectations of a moderated growth rate as the legacy assets under management (AUM) gradually reduce.
The company aims to achieve a return on assets (ROA) of over 3 percent by FY28, driven by efforts to enhance operating leverage and reduce the operating expense (OPEX) to AUM ratio to 3.5-4 percent.
Management has expressed confidence in achieving its targets for reducing legacy AUM while maintaining net worth neutrality throughout the process.
Additionally, the company remains committed to improving asset quality, strengthening customer engagement, and leveraging technology to enhance operational efficiency.
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Financials
Piramal Enterprises reported a marginal growth in revenue from operations, experiencing a year-on-year rise of nearly 4.3 percent, from Rs. 2,193 crores in Q2 FY24 to Rs. 2,288 crores in Q2 FY25.
Similarly, its net profit increased during the same period from Rs. 48 crores to Rs. 163 crores, representing an impressive growth of nearly 239.6 percent YoY.
Stock Performance
The stock has delivered positive returns of nearly 18.5 percent in one year, as well as around 20 percent returns in the last six months. The shares of Piramal Enterprises have given negative returns of about 8.4 percent in the last one month.
About the company
Piramal Enterprises Limited is engaged in the business of providing finance and is classified as a Non-Banking Finance Company – Middle Layer (NBFC-ML). It is a leading diversified NBFC with a presence across retail lending, wholesale lending, and fund-based platforms.
On 26 July 2022, the company received a Certificate of Registration from the Reserve Bank of India (RBI) to carry on the business of a Non-Banking Financial Institution-Systematically Important Non-Deposit taking.
Written by Shivani Singh
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