Piramal Enterprises Ltd

(David philips) #1027

Good info on PEL from the financial services day by the management.

(srikanthg) #1028

PEL has corrected since recent high of 31xx, is it good time to add? Still the sentiment seems against NBFC’s and premium valuation of the same, what is the correct PE of PEL we can assume?, Price to Book is 2 which seems reasonable.
Thanks in advance.

Disclosure : Sold at 3xxx and may add within next month.

(Marathondreams) #1030

Mr. Ajay Piramal talking about “big blowup in financial sector” as the biggest risk. This is on 30th Aug 2018. He has seen it coming …Hats off to the man!

Listen in in the first video “way forward” presentation. 7 minutes into the video…


Which video are you referring ?
Please share the link.

(Ashish) #1032


The First Video in link shared by David on Piramal Financial Services day

(srikanthg) #1033

Yes, he has pointed risks of liquidity and PEL is in good position since they already did CCD debentures, QIP at approximate price Rs2600, which will be converted in a year if we discount To that price buying at CMP 2400 seems a good deal. But I really don’t have the clear EPS history to understand the risk in investing now.

(HR) #1034

Interesting development for Shriram Group and hence, PEL. Needs to be seen at what valuations will PEL exit (if at all). Else, what’s the total worth (valuation) of the overall investment in Shriram group (post merger).

(ramanhp) #1035

Dont go by the video label. Here Piramal speaks about NBFC situation and PEL’s financial arm(s).


This holier than thou attitude is unwarranted. Let’s be clear our Indian market doesn’t have availability 10-15 yr capital at affordable rates. Mismatches are bound to happen. Even if someone has long term capital at certain rate nobody will raise long term capital at fixed rate as we are a country of volatile rates and economic cycles. This cash flow mismatches will happen in future too and nobody can forecast it. It is also wrong to give blanket statement that low promoter holding is a sign of bad governance.

(kris2727) #1037

Honestly, I wouldnt be worried about Piramal Enterprises until Ajay Piramal is at the helm. One should buy this stock on declines.

(Parag) #1038

[From Recent Interview of Mr Ajay Piramal ]

Contrary to the broader perception about the current Debt crisis, where’s many experts believe NIM compression for NBFC sector per se, Ajay Piramal is hinting at NIM expansion at PEL (time around 10:40 in the video).

Earlier there would be competition for the projects. PEL would do a lot of due diligence and offer developer rate and size for the project. When the other NBFC would then know that PEL has done the homework, they would provide a lower rate to the developer, thus taking a customer away from PEL.

Now, this will disappear, and the current crisis would allow PEL to charge higher interests. This will help them in NIM expansion.

I am not sure if this will be next quarter or over the next few quarters.

(Susindar) #1039

I think this is a bit too much. Am pretty sure other competing companies can do their own valuation and provide a competitive interest rate. It is not like only Piramal can accurately value a project like it is some kind of a moat. Besides it is very common for competitors to attractively price their product to win clients which Piramal is free to do as well.

(Growth_without Debt) #1040

Even Edelweiss is also claiming for NIM expansion after this debt crisis…refer recent clarification published on exchanges

(David philips) #1041

Hi can you please share the interview link.

(Abhinav Mehrotra) #1042

I need help getting some context on what Mr. Khushru Jijina said in his presentation on the Piramal Financial Services Day.

Here is the link: https://www.youtube.com/watch?v=EzkxplwfysE at 54.5 minutes.

He says that their NBFC is the only one who has a nuclear button, that will stop the customer from defaulting on Piramal.

Anyone who understand this statement and can provide more context on this, please do share.

Is he signalling that Piramal has first charge on the prized assets on the developer?

Thanks in advance.

(deeps2884) #1043

“Nuclear Button” which Mr.Khusru Janna is referring to is that they can take over projects as they have a sister concern which is a real estate developer (so they do understand the business very well) so while sanctioning and disbursing the loan if they are able to maintain security cover and if their is a default then with the help of their realty arm they can take over the project and ensure that the loan gets repaid (ability to complete incomplete project as well as ensure sale of inventory)
Best way of looking at Financial Services of Piramal Enterprises is Loss Given Default (LGD) if while sanctioning loan and disbursing loan they take care of security cover (1.5x to 2.0x) even if their is a default, Piramal Enterprises would be able to take over the project and ensure that project gets completed and even if they sell at a discount (20 to 30%) they would still be able to recover the loan amount. (Most NBFC don’t have completion ability which prevents them from taking over projects mid way)
For Example - assuming worse case situation 40% of the loan book goes bad (Rs.40 goes bad) they still would have Rs.60 of security cover (1.5x) which in worse case can be sold at Rs.46 which means no loss to Piramal. They can sell upto 40% discount without much loss.

(Growth_without Debt) #1044

Thought it is old report, it is good to read it again -

(phreak) #1045

Thanks for sharing.

If housing sales has de-grown by 8% CAGR between CY14 and CY17, what exactly have HFCs been funding that their share prices have gone up anywhere between 5x-10x during this time?

That’s a lot of inventory buildup i have been hearing about for a long time now. If it is hard for retail business to sit on inventory without being frowned upon, how have the developers been able to sit on their expensive inventory for this many years without a meaningful correction in prices (going by rental yields here)? Are these loans disbursed by HFCs merely propping up the sector by enabling the developers to hold their inventory longer?

The ambit report is pretty negative on Piramal Enterprises/Piramal Capital for running huge ALM mismatches and for having risker real-estate developer loan book and for having longer-tenure loans. I have found the idolising of Mr.Piramal in this thread borderline scary.

(Parag) #1046

I have updated me comments with video and time in the original post.

(Krishnaraj) #1047

There was, is and will always be a demand for idols. And, as Graham (my idol :slight_smile:) said, “…the demand being there, it must be supplied”.

PEL has the most ALM mismatch and so it was important to come out quick and aver with the greatest of confidence that things are fine. Because if you don’t market will get the better of you, and Mr Piramal knows that very very well!