PEL just spent 100 Cr that is 1.6% of their annual PPL sales. Even if this investment goes to 0 it will not make any material dent in the intrinsic value of the company ( y invest so much time and energy discussion this)
As you can see, FIIās have increased their shareholding for last 4 quartersā¦whereas DIIs and public shareholding has gone down. Would be interesting to see Dec end shareholding pattern when FFIās and FPIās are on selling spree
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So Piramal has near to ~15% indirect stake in Shriram GI Holdings, and KKR deal as per news report is 2000Cr for 10%.
But PEL management is valuing its investments in Shriram as 4598 Crs as per latest filings.
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Rajiv Banerjee joins Piramal Enterprises as Group Headā Corporate Communications.
His previous stint was with HDFC Bank where he worked for more than nine years.
Banerjee has diversified experience in both, media organizations and corporates like Economic Times, Brand Equity, Financial Express, NetScribes, United Television (UTV), Hinduja Media, and Beacon Television.
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Piramal Pharma to double sales of the consumer healthcare division to ā¹1,000 crores in next 2-3 years.
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PEL started moving to recover lost monies from DHFL loans, which they must have written down completely while acquiring. If successful, this will be additional bonanza.
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Any boarder here has any view how this might impact any recoveries from the DHFL loans (Rs.45,000Cr. paid just Re.1 by Piramal)
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Notice to the stock exchanges attached below
how this nclat fight impact pel performance overall?
This is an interesting development, not ideal for PEL shareholders. This is how I am thinking it loud for my clarity of thoughts.
Problem: PEL has acquired around 40,000 cr of wholesale loans from DHFL and attributed Rs 1 value to them in their book. NCD holder wants to claim their rights on the recoverable amount.
In the worst case, if Apex court also goes in line with what NCLT order suggested, then PEL has to comply (I am assuming, although it could still go on). Assuming PEL accept the order (big if) and need to give access to NCD holder. PEL will say to their shareholder that they have not assigned any value in their book, so it is not lost.
Also, most analysts are stating that they see value in the wholesale book, but it is challenging to attribute recoverable. I guess Piramlaās must be aware of this scenario; hence they have not raised investor expectations.
Whenever the question was asked about the wholesale book in their con call, they said they highlighted the upside but intentionally did not initially mention any guesstimate. PEL investors are hoping that the money recovered from wholesale is upside but do not know the amount.
However, this is throwing a spanner in their wheels. I think PEL will not go aggressive in pursuing wholesale borrowers as it could be a wasted effort in case the order goes as per NCLT order. Having said that, the wholesale borrowers are seasons builders themselves, so they are unlikely to budge easily even with Piramalās legal firepower. Either way, wholesale recoveries will take years with or without this order.
Ideally, from PEL perspective, this should have been resolved (above case) before taking it over. If PEL knows what it knows now, will they have bought DHFL at the same price? In my view, they might not have. After all, they paid 32,000 + cr just for retail loans (most), which does not seem logical. The wholesale loan was part of the puzzle, but that part of the puzzle is playing now, and no other bidder had offered a better deal than PEL as it was the winning bid for DHFL.
So in the short term, I think PEL will go full steam on DHFL retail portfolio, but wholesale will take an even longer time until this case is sorted. I personally do not see much impact of this in the next few quarters at least. Sooner or later Pharma spin off will get into focus.
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Thanks for the details.
I have been observing PEL since long ( not invested now)
I was really surprised to know the legendary distressed securities investor, Howard Marks of Oaktree Capital was in bid for DHFL. Oaktree had offered 28000 cr but PEL outbid them by buying it at 34250 cr.
I am in medical profession and dont know all the finer details. But when I came to know this, I had my doubts about PEL buying DHFL.
Anyway, I am tracking PEL for their Pharma business demerger and may invest in their separate listed Pharma business.
Regards,
Dr. Vikas
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Very good video from Money life.
As per the video, the recoverable value of whole sale book is around 10,000cr.
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I think Piramal can not be held responsible in this. They have acquired entire DHFL (with assets and liabilities) at a fixed price which was the highest offer by any bidder. As part of the process, they were asked to provide a breakup in which they placed value of Rs 1 to 45,000 Cr loans. It was only a artificial breakup of the figure and has no meaning in my opinion ( if they would have been smart enough, they should have put Rs 1000 Cr as recoverable for wholesale loans and reduced Rs 1000 cr from valuation of other assets).
Imagine if Oaktree Capital or Adani would have won the deal, the issue would have remained the same, maybe bit worse as banks would have got less money as their bid was lower. I have all the respect for Sucheta Dalal but the video repeatedly paint Piramal as a culprit which I find ridiculous. It is the Committee of Creditors and the IBC process which is the main culprit, if any. Piramal as an acquirer will have to do lot of efforts to revive this dying company and they must get their rewards for taking this risk. Otherwise in future, no one will bid for bankrupt companies.
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it is worth noting that people who were willing to put money behind their opinions thought otherwise.
valuation is subjective question is are you willing to buy at that priceā¦ if PEL sells its wholesale book now what will be the value people would buy atā¦
Disc:- Hold PEL
I fully agree @Marathondreams
I think the video is not painting PEL in the right spirit, and it is made from the point of view of NCD holders. It has all the valid points from NCD holders point of view, but it does not consider views from PEL and the amount of risk they took. COC tried to sell individual assets (wholesale, retail, insurance) separately, but they found PEL value to be better than any other combination they might have found.
DHFLās 90,000cr is a huge asset, and no one knew how much is true and how much is fake/fraud. Grant Thronton, who has been auditing the firm, has all the access to the books for more than a year (or two), could not figure out how much the fraud is. In fact, they figured out fraud in their retail as well as wholesale business to the tune of more than 10,000cr after PEL won the bid. PEL did not have access to the full information during the bidding process, so they bid conservatively for DHFL.
Size is so huge for the acquisition that if anything goes wrong, it has the potential to bring down the full Piramal empire (of significant part) bring his 30+ years of reputation in tatters. So yes, it is easy for people to say, what they want to say, but last August-Oct, when the bidding was going on, there were not many bidders, and PEL won the bid in global competition. Oaktree, managing $158 Billion of AUM, and for whom bidding for such business globally is the day job, did not find value in going beyond PELās offer. So that tells a thing or two.
What happens will be decided in the court. However, it may take years. Hopefully, by that time, PEL will power on their retail assets.
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Sucheta Dalal is more smart than you think. She has contacts and expertise to do probe and to know where there is smoke. She does not have fool proof evidence that is why there is no direct accusation.
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