ValuePickr Forum

Piramal Enterprises Ltd

looks like some scamsters have hacked into the database of LinkIntime (registrars to the rights issue) and have gotten hold of the list of share holders.

Just received a mail from

PARASRAMPURIA SHARE & INV CONSULTANCY MUMBAI

offering to pay for the rights issue form given to share holders offering to pay spot payment, etc.

any idea how this thing works? Is this genuine?

disclosure: holding Piramal and have applied for rights issue

shiv kumar

Same here. I also received the same mail from " PARASRAMPURIA SHARE & INV CONSULTANCY MUMBAI"

Is everything fine.
Disclosure: Invested.

Yes I too received it.

Its not uncommon. In the past, I have received requests (for Tata Steel as well as South Indian Bank rights issue) from some agency or other to buy out my rights shares, in case I am not interested. I think these guys are hand in glove with registrar of various issues.

In nutshell, nothing to get alarmed. Juts ignore them.

Okay just a small query: When applying through ASBA for the rights issue, I just have to submit the signed CAF form at my bank (Kotak) where my savings account is right? or something else needs to be done?

You need to contact your bank branch whether they will accept or not. For me My kotak savings bank branch directed me to main branch in Hyderabad to submit. I was able to submit in the main branch in Hyderabad

Okay cool, will get in touch with my bank.

Thanks!

Please refer to page 281 of the Letter of Offer under Procedure for Application through the ASBA Process.

The list of ASBA branches is available here and here. If your branch is listed, you can submit your CAF form there.

PEL has decided to sell health analytics and insights business for $950M (2.3x gain in 7 years) to further strengthen the balance sheet (link)

Any comments on this from experts?

Discl: Invested

AP was saying this will create value for shareholders…I dont know how…

Note that the calculation will be more complicated than this because a lot of investments were made into DRG (or the Information Management segment), more than profits made.

As such $635 milllion in May 2012 (~ ₹ 3,400 cr at then fx rates) was invested, and current capital employed for this segment, is ₹5,300 crores ( ~ $740 million), accumulated profits have been thin (based on segment results shared). Thus more capital was added to this business over this time frame. The time period is more than 7.7 years.

Thus annualized returns would be lower.

Piramal is struggling because of real estate slowdown . 2 Rights issue in 2 years , exiting of shriram group at cheap valuations & exiting of healthcare analytics(valuation looks to be decent), all points to stress in his loan portfolio & is desperately in need of fresh capital.
Also the money raised from banks in the last few quarters are at a higher interest rate even though the interest rate in india was falling .

I havent yet applied for rights issue & are still in 2 minds whether to apply or not

Disc: 12% of my portfolio

Isn’t it strange that he eventually sold off good businesses DRG (ideally should have been scaled), Shriram group companies and is left with real estate financing business only which can be as commoditized as it can get.

In hindsight what if he had focused on Pharma and scaled that business.

He was not making money in DRG…it was struggling…

DRG has been a drag on both top and bottomline and Piramal has been considering selling it off for the last three years after one more attempt to scale it up. He admitted to this much during the AGM much before the IL&FS/DHFL crisis caused financial companies’ stock pries to melt. Now one has to wait for value unlocking in the company’s pharma business which is expected in the next few months.

disclosure: holding and applied for double my entitlements in the rights issue

shiv kumar

2 Likes

Poor due diligence when bought or management incompetence to run it profitably. Such businesses(consulting and analytics) are inherently good profitable businesses.

Isn’t it a case of what we call Reinvestment risk when you keep selling businesses to book profits to buy something cheaper. Sooner than later you are likely to get caught on wrong foot.

No wonder Berkshire don’t want to sell their businesses ever.

Looks like Piramal is planning to raise more money by selling minority stake in pharma entity.

Anybody have an idea how much of Piramals loans are stuck in unsold or incomplete real estate property ? it seems he’s trying to put down fire in his financing business.

total money raised in last 2 years : ~16300 cr + deals in progress
rights issue 2018 : 2000 cr
rights issue 2019: 5400cr
shriram transport sale : 2300cr
data analytics group: ~6500cr
shriram investment (shriram capital) : looking for an exit
piramal pharma entity: looking to sell minority stake

Piramal Management now returning back to quite comfortable Zone.
Slide aimed to bring down Debt Equity Ratio with Right and Prefential itself.
Now Raising around 7000 Crs through selling Helthcare Insight & Analytics Business will further strengthen it’s Balance Sheet.
Now tunnel seem to be over for PEL with New Lights