Piramal Enterprises shares tank 8% after Q1 results, share buyback. Motilal Oswal sees stock at Rs 1,260

Shares of Piramal Enterprises plunged 8 per cent in Monday's trade following the announcement of share buyback and the release of June quarter results. The board of Piramal Enterprises approved a share buyback of up to 1,40,00,000 shares of face value Rs 10 each for an aggregate amount not exceeding Rs 1,750 crore. Piramal Enterprises set the buyback price at Rs 1,250, which was at a 16.51 per cent premium over Friday's closing price of Rs 1,072.80 for the stock.

The buyback size represents 5.87 per cent of the total paid-up equity share capital of the company.

For the June quarter, Piramal Enterprises clocked a profit of Rs 508.78 crore compared with Rs 8,155.47 crore in the year-ago quarter. The company had recorded an exceptional gain of Rs 7,613.96 crore on demerged Pharma undertaking in the year-ago quarter. Revenue from operations stood at Rs 2,898.97 crore compared with Rs 2,161.28 crore in the same quarter last year, Piramal Enterprises said on Friday.

Following the development, the stock fell 8.09 per cent to hit a low of Rs 986 on BSE.

Motilal Oswal Securities said Piramal Enterprises has already gone through the process of recognising stressed assets and making corresponding provisions. It is now embarking on the resolution phase, and this quarter served as evidence of that progress, the brokerage said.

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"A few more quarters of successful resolutions in the wholesale segment would further bolster confidence in the normalisation of credit costs," it said while suggesting a target of Rs 1,260.

Piramal Enterprises said it was evaluating potential M&A opportunities in small business lending, microfinance, and gold loan segments. It could utilise the surplus capitalisation to achieve inorganic growth in some of these segments, the company said. For the June quarter, the company opened 19 new branches. It now has 423

conventional branches and 136 microfinance branches and plans to expand to 500-600 branches over the medium term.

"Over the next two years, we expect the company to make meaningful inroads into Retail, led by mortgages/LAP and complemented by a good mix of unsecured loans. Product diversification within Retail will help PIEL deliver strong growth and reduce concentration risks. We expect Piramal Enterprises to deliver 2.1 per cent RoA and 6.3 per cemt RoE in FY25E. We acknowledge that PIEL possesses pockets of value," Motilal said.

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