Piramal Enterprises Ltd

Stock Opportunities
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Nice interview by AP …

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Very candid and appealing. Thanks for sharing.Here are few points which resonated to me while listening :

  • In developing economy, it's the counter party/person you deal with matters and not the income statement.
  • 2/3rd of M&A does not create value but it has been vice-versa incase of Piramal.
  • Businesses with long term vision generate the most wealth. Short term vision make money/Market Cap for a short while before it all goes down.
  • Delegate to capable people and devote your time to new things, if other things are established and well taken care of.
  • Act as a trustee and ensure to give back to all the stake holders.
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May be OTC business as well in the demerger race… story about Ajay Piramal’s daughter who is leading OTC bussiness


Link courtesy @rajpanda

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@lustkills @desaidhwanil, Thanks for your fantastic response.

Any ideas on how the alternative AUM handling business is valued in market on ball park basis ?
As per the presentation, they are managing about 8700 cr. of AUM.

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Typically this is a % of AUM. Could be anywhere between 3-10% of AUM.

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@sainsat,

Thanks for sharing wonderful interview. After listening to him, I felt like I should move all my money to Piramal Enterprises stock, as he is vey humble and his past record shows he is very good in generating wealth for his stakeholders.

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For back of the envelope calculation of the Alternative AUM valuation, I’ve been doing the following;
(3% of AUM) + (7.5% of AUM as sponsor commitment, taken from FY15 AR)

In PEL’s mota-mota valuation estimate, the alternative AUM part seems unlikely to move the needle much.

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Outlook on the babycare brand little in Business Line 13-06-16

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Ajay Piramal’s later interview inn ET Now:


some brief points:

  1. PEL would be divided 2 segments(Financial Services and Healthcare) in 12-24 month.
  2. They are eyeing Lafarge Cement Business but from their Personal Kitty
  3. Piramal had around 10 FDA with no warnings and he said, FDA is not targeting India

Disc: Invested with <5%.Slowly adding

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Piramal finally started making his moves in making changes as a first step towards realigining Shriram with Piramal . This will help him to demerge Financial service and merge with Shriram group’s financial business.

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AR is out…
http://linkintime.co.in/website/gogreen/2016/AGM/Piramal%20Enterprises%20Limited/Piramal%20Enterprises%20AR%202015-16%20(with%20att%20slip%20and%20proxy%20form).pdf

This time looks more informative… still going thru it…

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Clarification question: Is the interest income of 1650 in this presentation or in the annual report? Or it is an estimate based on the bottom right chart on slide 14 of the presentation?

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Latter (i.e. slide 14 based). Cheers.

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Wondering about two things. 1) Piramal Imaging - Could not find sales / profile /loss info in AR or earlier presentations. Is it because numbers are negligible? Wondering how much was paid to acquire this. 2) Who is holding all the IP Piramal life sciences?

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PEL has very strong board with Independent Directors. All of them are heavy weights and I haven’t come across a better board (Independent Directors) than this. AP clearly has done good job with this. Now coming to executive board - 3 out of 4 in executive board are from Piramal Family (AP, wife and daughter). Only Mr. Vijay Shah, who is with the company for 25+ years is in board. Isn’t this odd? or Is it a common practice since he holds major chunk of the company? Curious to know what others think of this…

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New AR seems pretty informing. However, what do the experts make of the company’s increased focus on Financial services business as compared to the Healthcare business? Considering the slump in real estate.

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Let me put forth my valuation of piramal enterprises by end of this financial year.

  1. Piramal Capital.

a. FS loan book around 25000 crores. Assuming a Capital Adequacy ratio of 25 percent this means a book value of 6250 crores. Using a Price
to book value of 4.5 valuation is around 28125 crores.

b. AUM business @ 3 percent of AUM of 10000 crores or 300 crores.
'
c. Sriram group valuation (estimated market) of around 7233 crores. *Assuming zero holding co discount assuming value unlocking on piramal capital
being merged with sriram capital.

So total valuation is (28125+ 300 +7233) = 35658 crores or Rs. 2067 per share.

  • I have assumed that all debt on piramal books is on the piramal capital side. This has been validated by piramal who has stated in an interview
    as such.
  1. Healthcare

I am assuming sales of 4056 crores (14 percent growth over FY 2016 sales). Using a valuation of EV/Sales of 4.5 valuation comes to 18252 crores
or Rs. 1058 per share.

  1. DRG

I am assuming sales of 1317 crores (14 percent growth over FY 2016 sales). Using a valuation of EV/Sales of 5 valuation comes to 7907 crores or Rs.
458 per share. (6 EV/sales is mean peer valuation taken from piramal investor presentation data).

So total valuation at end of this financial year comes to (2068 + 1058 + 458) = 3583 Rs at the end of the financial year.

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Forgot to add Invested with a huge allocation of my portfolio from 1000 levels

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Hey Hrishikesh,

nice summary here, i dont doubt the strength and opportunity this presents currently only concern to me to increase my holding is the sharp rally which has kind of skewed away from its current and apparent financials a bit.

While i am waiting for the demerger situation to shape up keenly, what are your thoughts on this at CMP.

Thanks

Disc- invested