Target: ₹1,250
CMP: ₹1,126.10
We interacted with the senior management team of Piramal Enterprises (PIEL), represented by Jairam Sridharan, CEO, Retail Lending and MD of Piramal Finance, to gain insights into the company’s future growth plans and other strategic
PIEL is now more confident about its Retail business strategy and has emphasised that legacy challenges are largely behind. The company plans to further reduce its legacy wholesale loan book from INR70b to ₹3,500-4,000 crore, over the next one year, without any impact on its net worth.
Additionally, it expects to receive a deferred consideration of $120 million from the sale of Piramal Imaging within the next 3-6 months. This, along with recoveries from its AIF, will further improve the company’s ability to accelerate the run-down of the legacy AUM.
We believe that the phase of earnings volatility is now comfortably behind, and that there will be no negative surprises or volatile quarters going forward
While we anticipate greater earnings stability and an improved outlook going forward, its return metrics remain modest, with RoA and RoE estimated at 1.9 per cent and 8 per cent, respectively, for FY27. We value the lending business at 0.8x FY27E P/BV. Reiterate our Neutral rating on the stock with a revised TP of ₹1,250 (premised on Mar’27 SOTP).