Could anyone please explain the reason behind the abysmally low return ratios? Is it due to some temporary setback, and expected to normalise soon?
Reading March '17 statements, on a NetWorth of ~14,000 crores, they made a profit of 1,250 crores. Given that their Finance biz is generating 25% ROE and usually large pharma companies all have ROEs in the 20-25% range, can we assume Piramal’s ROE has significant room for improvement? If it were lets say 22%, company could have been making a profit of 3000-3500 crores on a 16k crore equity. ( BVPS= ~800, assuming normalised EPS to be 160-200 ) At this price, if my assumption is correct, the stock looks unbelievably attractive.
Disc: Looking to raise allocation, to 30% of PF.