Shares of Piramal Enterprises sank over 9 per cent in early trade today despite the firm turning profitable for the quarter ended March 2022. Piramal Enterprises stock lost 9.52 percent to Rs 1679.15, a fresh 52-week low, in early trade.
The large-cap stock has fallen after two days of consecutive gain. Piramal Enterprises stock is trading lower than 5-day, 20-day, 50-day, 100-day, and 200-day moving averages.
The share has lost 6.09 per cent in a year and fallen 35.7 per cent since the beginning of this year.
A total of 0.37 lakh shares of the firm changed hands amounting to a turnover of Rs 6.33 crore on BSE. The market cap of the firm fell to Rs 40,548 crore on BSE.
The large-cap share hit a 52-week high of Rs 3,013 on October 7, 2021. Piramal Enterprises reported a consolidated net profit of Rs 150.53 crore in the fourth quarter ended March 31, 2022 against a consolidated net loss of Rs 510.39 crore in the year-ago period.
Consolidated revenue from operations in Q4 stood at Rs 4,162.94 crore as against Rs 3,401.56 crore in the same quarter last fiscal.
Pharmaceuticals segment clocked revenue of Rs 2,139.15 crore, while the financial services vertical registered Rs 2,023.79 crore during the quarter.
For the fiscal ended March 31, 2022 consolidated net profit climbed to Rs 1,998.77 crore compared to Rs 1,412.86 crore in the previous year. In FY22, consolidated revenue from operations rose to Rs 13,993.3 crore as compared to Rs 12,809.35 crore in FY21.
However, the stock fell as the company made Rs 820 crore in additional provisioning and interest reversal of Rs 220 crore (totalling Rs 1040 crore) on three non-RE accounts, which were classified under Stage 2.
Motilal Oswal has maintained its buy call on the stock.
"Over the next three years, we expect the company to make meaningful inroads into Retail, led by mortgages and complemented by shorter tenure loans originated through digital partnerships. Product diversification within Retail will help Piramal deliver strong growth and reduce concentration risks. We expect the Financial Services business to deliver 1.8 per cent RoA and 8 per cent RoE over the medium term.
We have cut our target multiple to 1x P/BV for the Financial Services business on the back of potential asset quality risks in the Wholesale loan book. We have cut our FY23/FY24 Pharma EBITDA estimate by 8%/4% to factor in: a) extended supply chain challenges in the CDMO/CHG segment, b) higher raw material cost, and c) greater promotional costs in the ICP segment. We have valued the Pharma business at 17x EV/EBITDA to arrive at our SoTP-based target price of Rs 2,250 per share (FY24E based). We maintain our Buy rating," the brokerage said.
CLSA has given a buy call on the stock but cut its target price cut to Rs 2,330.
The brokerage said Piramal Enterprises reported a bad Q4. "In the lending business, the firm incurred Rs 800 crore of credit costs after incurring negligible credit costs during the past 7 quarters. This was because three wholesale loans were classified as 'Stage 2' this quarter," it added.
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