Dear All,
The interest rates 18 to 24% are typically considered benign in the unsecured & unorganized markets. In fact financial institutions can only lend to few entities and majority players look for short term funding , say one to three years. I think Piramal offers considerable flexibility & support to such Builders who also benefit from the discipline essential for structured funding. I feel Piramal will continue to do better than his peers due to the due diligence they do plus the understanding RE of micro markets within the metros…
I wish to remind and highlight that many people had doubts about Piramal getting the money fully from the Abbot deal eight years ago and the stock was available below cash due. Then,PEL yearly EBIDTA was around 400 cr, Eight years later we can look forward to a net profit of 2000 to 2500 cr ( with little change in equity ) and in the meantime PEL returned most by way of dividend and buy back.
In between he succeeded in many deals ( vodafone,DRG,financial foray etc) and lost in few ( Drug research, imaging. cargel etc).
AP was not seen much in public nor was he interviewed regularly in those times… However. AP took a considered decision some time after the Vodafone engagement and is seen being more vocal about his ideas. I feel, the present crisis in the industry will help AP to reassess and reorganise the companies stance towards risk…
To sum up, I feel PEL can continue to deliver better returns ( over long term ) to other instruments and the main reason for this is the firms superior capability to understand the pharma and RE industry dynamics.
Disc… invested since 2010.