You may compare the valuation end of this financial year and compare with current prices to reach a decision yourself. Many a times we are afflicted with a price bias. Instead of focusing on recent price rise the focus should be on the valuations and how far they are from the current price.
One more thing they have now raising their borrowing limit to 44000 crores now. This implies a massive push on the financial services business. They think the Structured Finance group will scale up as fast as their real estate investment.
You need to understand that they are concentrating exclusively on areas with Sriram group has minimal presence. So both Sriram capital and piramal seem to be moving in synergy.
I think it should be ok may be you can take it as 4. Here is a representative list. If you take a peer to peer comparison then their metrices are top notch.
Here are some peer pb ratios
mahindra and mahindra financial services 2.79
HDFC 4.19
Bajaj Finance 6.41
Indiabulls housing finance 4.53
Look at this way. If they reach a 25000 crore loan book end of year with a 4 PB valuation is around 25000 crores (assuming 25 per capital adequacy). Plus say 7000 crores sriram market value takes it to 32000 crores or Rs. 1868 rs valuation one year coming with current price of 1600 rs.
The healthcare division and DRG comes free of cost. We Indians like stuff free. We are getting a 4000 crores healthcare company and a world class analytics firm with 1250 crores turnover free of cost. Some bargain this.
You have answered your own question really. All the loans are in sectors which are already in a cyclical downturn - Real estate, Distressed Assets, Infrastructure etc. So in a way the current parameters are what they are at the bottom. Typical Ajay Piramal Contrarian bets.
As per Screener, the following shows up for Piramal Enterprises.
Pros:- Company has been maintaining a healthy dividend payout of 36.10%
Cons:- Company has low interest coverage ratio.- Promoter’s stake has decreased- Though the company is reporting regular profits, it is not paying out tax- Company has a low return on equity of 3.00% for last 3 years.
Amongst the Cons, I am unable to find out why and by how much the promoter stake has decreased. Generally I have read that promoters decreasing their stake is not a good sign, hence wanted to understand this better.
Some points:
Financial Highlights for the quarter
• Revenue : 27% higher at Rs.1,776 Crores during the quarter
• Operating profit : 174% higher at Rs.638 Crores during the quarter
• Net Profit : 36% higher at Rs.231 Crores during the quarter
Operating Highlights for the quarter
• Loan Book increased by 112 % to Rs.16,112 Crores as on 30 Jun 2016 as compared with
Rs.7,611 Crores as on 30 Jun 2015.
• Pharma Solutions business’s Mahad site cleared its first ever USFDA audit without any
observation
• Critical Care business renewed major GPO (Group Purchase Organisation) contract in US for
Isoflurane with >30% price increase.
• Consumer Products business completed integration of Little’s & MSD brands acquired in
FY2016
• At DRG, 210+ positions on boarded in Bengaluru and Gurugram offices
There is nothing much add to the investors’ presentation. Ajay Piramal did
not give any time-frame for the re-organization of Piramal Enterprises
though he did say that the management is working on de-merging the Finance
business from PEL.
However in newspaper interviews earlier this year he had spoken of around
two years’ time for the restructuring of the company to be completed.
He indicated that he was open to investment opportunities provided the
target companies were a good fit with the Piramal group and had the
potential to provide good earnings growth.
Piramal admitted that the Imaging Business had a lot of potential but
growth was slow.
Yes true. Actually most of the talks by the mgmt esp. by mgmt like AP would seem relevant when the stock is in limelight. Most relevant IMHO was AP’s interview by SB when AP sold his pharma business and the stock was in doldrums with few takers.
I was just concerned that it’s an old video and already posted long back in this thread also so reposting it without any remarks regarding timeline may give wrong signals to those looking for fresh entry…
I hope you would take it in the right spirit.
Disc: Invested with 15% of my portfolio from much lower levels
Excellent interview of Mr. Khushru Jijina from Piramal Fund Management about investment in real estate market in India and Piramal’s entry into real estate financing.
Thanks @Marathondreams for this insightful interview. Specifically I liked their ability to step in, in case of default, to take over the operations due to their knowledge of Real Estate business which, as per KJ, their NBFC friends lack and also the insight that the Real Estate is predominantly local thing.