Observations on the Annual Report
folding its lending businesses into the housing finance umbrella is expected to result in higher margins going ahead.
investments in Shriram group is taking time to pay off. value of investments have barely doubled in the last five years. We have to see how Piramal’s team is able to restructure the Shriram group of companies.
ROE of the finance business is expected to improve as the funds raised from the rights issue get deployed in the coming quarters.
Housing finance business is going to newer cities. Management is talking of very low NPAs in the housing businesses. We have to keep an eye on this.
A few steps closer to the pharma business being demerged from the finance business.
EBITDA margins in the pharma business is scaling up. From 14 per cent CAGR in 2013 it is now up 22 per cent. in organic growth in the sector is continuing.
Desflurane is expected to be launched in the current FY which will add to both top and bottomline.
Within the pharma business, special focus seems to be on the consumer products portfolio. IMHO this will need to be watched out for in the coming years. PEL says it aims to be among the top three OTC companies by 2020.
Last year it faced some problems due to GST which seems to be behind the company.
Revenue is growing at a CAGR of 18 per cent. but operating efficiencies are expected to add majorly to bottom line going forward.
No compete clause with Abott is expected to end soon, so expect PEL to enter some segments.
Information Analytics business
this business is a slow grower which Ajay Piramal had gotten into after the Abott deal. While the finance and pharma business have scaled up, the DRG business has not. Could be Ajay Piramal is waiting to sell this since this seems to be dragging down PEL’s ROE.
Any sale of DRG will be a big booster for PEL.