Piramal Enterprises FY25 Results
I was reading these following links to get a sense of how capable is Piramal Group and how it can deliver on these projections in the feasible future.
Going to presentation of DHFL Acquisition, it is evident that management did walk the talk of going big on retails accounts. Retail loan will account of almost 80-85% in the total loan book by FY26.
I am thinking about the profitability after the legacy books have gone to zero after all the recoveries from AIF, Shriram stake sale and Piramal Imaging and the company is left with Tax credits?
As per me, the profitability of the non legacy book (i.e. performing loan book) is close to 900-1000 crores right now, which is bound to increase as the company matures.
Happy to hear thoughts on the same.
In PPTS and media talks, PEL did not mention that they will write off appro 40,000+ cr of wholesale 1.0 book by taking 25% cuts (in term of NPL) (whey they bought DHFL).
Although the portfolio has shifted significantly towards retail, the wholesale overhang continues. Hopefully from next year onwards when wholesale 1.0 become less than 3000 cr it will become insignificant.
Yes, I think we should think about the future where there is no legacy wholesale 1.0.
I found the situation in Piramal to be interesting. Made some rough notes which I am sharing. This is a new company for me. Would request experienced members to critique my reasonings.
What makes it interesting (in 1 line) ?
Why is the company available at low valuation?
What are the key issues with the company?
What are the Positives / key triggers?
Key Monitorables:
Valuation Comfort
| Bear Case | Bull Case | |||
|---|---|---|---|---|
| Carrying Value | Market Value | Market Value | Assumptions | |
| Shriram LI & GI | 1,708 | 3,416 | 5,124 | PB: 2 & 3 |
| Imaging Payout | 0 | 1,033 | 1,328 | USD 140 & USD 180 |
| Alternatives | 3405 | 3405 | 4,086 | PB: 1 & 1.2 |
| Pramerica Life | 450 | 900 | 1,350 | PB: 2 & 3 |
| Total | 5,563 | 8,754 | 11,888 | |
| Discount | 84% | 76% | At Current Mktcap of ~26,000 |
As mentioned earlier, this is a new company for me. Please help point out gaps in my thinking.
Disclaimer: Invested & studying for personal interest. Not a SEBI registered advisor.
Read previous history of acquisitions of Piramal Group. Ajay Piramal is known for good acquisitions. Also, read what DHFL acquisition did to Piramal Finance.
Q1FY26 results are in line with their guidance. Guided 25% growth, 22% in Q1 (despite being a lean quarter)
OpEx, Credit cost down.
NIM, AUM per branch up.
Legacy book going down .
PPOP, NPA, borrowing cost is constant.
Yield @ 13.6%
Seeing stress in unsecured business loans and LAP< 10 lakhs.
Gold loan coming soon.
In the legacy AUM, their provision coverage ratio for Stage 3 has reduced to 22% from79%, while State 3 number is still around 800Cr. I was thinking that PCR here shouldn’t come down, can the legacy AUM give a provision surprise, they would have thought about it and factored in their guidance for this years PAT…but just wondering, it seemed they shouldn’t have reduced PCR…any views?
There are some discrepencies in the Shriram Life and general insurance shareholding. As per FY25 AR of PEL, by end of FY24, they were holding 20% in Shriram Ll Holdings Private Limited and Shriram Gl Holdings Private Limited. Since these holdings are merged with their respective underlying insurance company, they got share of the insurance company itself which is pointed out in below screenshot.
As per this, Now they hold 20% in both insurance companies. But as per Shriram general insurance company FY25 AR, PEL holds only 13.33% and also as per Shriram Life insurance company FY24 AR [Unable to get hold of FY25 AR], Shriram LI holding had only 75% and post merger, PEL holding should be somewhere around 14% only. Not sure this is a mistake in PEL AR
Now when it comes to the Book value of the Shriram Life and General held in the PEL book, I see some thread assigning value to the insurance business with some multiple to the reported value. PEL assigns 1700 crore value to it and this is not the book value. This might be the proportionate value that they acquired consolidated Shriram. Combined overall networth of these companies are 3600 crore and PEL share is 500 crores
As per Shriram General FY25 AR, entire equity is in 2700 crores
At the same time, as per FY24 Shriram Life AR, equity is 900 crores.
Disc: Tracking
If you calculate the Market value of these shares held by PEL, wouldn’t that give a better idea of the values of these businesses?
You can easily track multiples of Life insurance business and assign some very cheap multiple for the general insurance business to calculate its market value
The General insurance companies like ICIC Lombard is 6 times Book value but it depends on what is ROE and how fast are they growing. General insurance can be 5 to 6 times book value, Life insurance can 3 to 4 times Embedded value or 1 times AUM. Anyways these will not matter much for next 3 years the growth in retail business and ROA Of 2 %t o 3 % is crucial for PEL. PEL can be 5X to 10 X in next 5 years if they do things well. But it challenged with high cost of Funds at 9 %.
@Vaibhavagarwal07 @amitverma21 I am neither calculating market value nor assigning some multiples to the insurance holding. I am simply pointing out that 1700 is not book value of the insurance company. When you simply read the investor presentation, people might get impression that it is book value of the company. Please see the note mentioned in the attached screenshot of the PEL presentation. There it is mentioned as book value. This will create some confusion.
As you can see, there are some past threads where that 1700 was taken as book value and based on that some price calculation is done. Simply stating, whoever doing valuation modelling based on book value, do not take 1700 as book value. Its upto each individual on how they want to value it.
Thanks for pointing this out. I think you are onto something regarding this discrepancy.
The FY25 balance sheet of piramal too mentions the investments as book value (note 45 & note 50)
But the numbers in the shriram LI & GI balance sheet do not match.
One explanation that comes to my mind is that the company in the past has revalued their investment as per market value. But i am not able to find this in the old filings.
Has anyone tracking the company for long seen this? Or can point me towards it?
Will need to email the company/IR to clarify this.
The NCLT has approved the reverse merger of Piramal Enterprises Limited (PEL) into Piramal Finance Limited (PFL), with a record date of September 23, 2025.
Right now stock is available at an attractive valuation, almost at book value.
The transaction aims to simplify group structure, optimize capital, and create direct value for shareholders by removing multi-layered corporate entities.
PFL will be a pure-play listed NBFC, which is more transparent for market valuation and benchmarking against peers.
I feel there are likely synergy benefits (cost savings, revenue growth, geographical expansion) post-merger.
Need insight of the forum members on the financials of PFL and their view on this merger.
Disclaimer: Invested, looking to increase my holdings in coming days.
as per the reverse merger notice, PEL shares delisted yesterday. Now PFL will complete the listing formalities and the new shares will be issues in due course.
If anyone has an update on this process, pl share.
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