Piramal Enterprises Ltd. Operational Performance Highlights
Piramal Enterprises Ltd. recently showcased a robust operational performance, with significant growth seen in its retail loans and a notable decrease in its legacy wholesale book. This shift in focus has led to a positive trajectory for the company.
Financial Stability and Outlook
The company’s asset quality remains solid in key product segments, with the exception of MSME and used cars. There has been a decline in credit costs within the growth portfolio, while operational efficiency has improved, resulting in better operational expense ratios.
The rise in retail business and a more diverse funding mix have led to an expansion in net interest margin, establishing a more sustainable and profitable lending approach for the company.
Projected Earnings and Strategies
Forecasts for FY26 and FY27 include gains from the AIF exposures and the deferred consideration of $120 million from the sale of Piramal Imaging. Furthermore, the company anticipates no tax expenditures in the foreseeable future.
While uncertainty surrounds the monetization of the stake in Shriram Life and General Insurance, expected one-off gains could offset credit costs linked to the disposal of residual stressed legacy assets.
Future Prospects and Ratings
Despite projections for increased earnings stability and a positive outlook, return metrics, including RoA and RoE estimated for FY27, remain moderate. The lending business is valued at 0.8x Mar’27E P/BV, with a Neutral rating on the stock and a revised target price of Rs 1,315 based on Mar’27E SOTP.
Overall, Piramal Enterprises Ltd. is navigating through a strategically sound path that emphasizes growth in retail and sustainable, profitable lending practices.
