Broker's Call : Piramal Enterprises (Buy)

| Updated on August 30, 2019 Published on August 31, 2019

Geojit Financial

Piramal Enterprises (Buy)

CMP: ₹2,048.45

Target: ₹2,119

Company reported strong topline growth in Q1FY20 (+20.8 per cent y-o-y to ₹3,506 crore). Growth is primarily led by robust performance in Financial Services division (+29.2 per cent y-o-y to ₹2,014 crore), despite liquidity tightening in the NBFC space and overall slowdown across sectors. Total loan book rose 20.2 per cent y-o-y to ₹56,605 crore, while gross NPA ratio stood at 0.9 per cent (63 per cent q-o-q decline in stage 2 assets), maintaining healthy asset quality.

Housing finance loan book improved about 4x times y-o-y to ₹6,110 crore, despite the volatile environment. The company plans to shift its borrowing mix towards long-term source of funds and has raised about ₹18,500 crore of long-term debt since September 2018, while reducing CP exposure to about ₹7,300 crore from around ₹18,000 crore during the same period. Segment ROE came in at 20 per cent.

Valuation: We believe the ongoing growth momentum will continue to support upside potential for the company. We value the stock using (SOTP) valuation methodology (based on P/B for Financials and P/E multiples for other businesses) and rate it a BUY with a price target of ₹2,119.

Follow us on Telegram, Facebook, Twitter, Instagram, YouTube and Linkedin. You can also download our Android App or IOS App.

Published on August 31, 2019
This article is closed for comments.
Please Email the Editor