Piramal Enterprises stock falls 9% despite Q4 turning profit
Piramal Enterprises' shares fell by 9 per cent in early trade despite the firm turning profitable for the quarter ended March 2022, despite the firm turning profitable. Piramal Enterprises' stock lost 9.52 percent to Rs 1679.15, a 52 week low, in early trade.
The large-cap stock has fallen after two days of continuous 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 has fallen 35.7 per cent since the beginning of the year.
A total of 0.37 lakh shares of the firm changed hands on the BSE, a turnover of Rs 6.33 crore. The firm's market cap fell to Rs 40,548 crore on the BSE.
The large-cap share hit a 52 week high of Rs 3,013 on October 7, 2021. Piramal Enterprises reported a net profit of 150.53 crore in the fourth quarter ended March 31, 2022 against a net loss of Rs 510.39 crore in the year-ago period.
Revenue from operations in Q 4 stood at Rs 4,162. There was 94 crore against 3,401, which is more than 94 crore. In the same quarter last fiscal, there were 56 crore.
The segment of pharmaceuticals had revenue of Rs 2,139. The financial services vertical registered a total of 15 crore, while the financial services vertical registered a total of 2,023. 79 crore were spent during the quarter.
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The net profit rose to Rs 1,998 for the fiscal ended March 31, 2022. 77 crore was compared to 1,412 in the same year. In the previous year, there were 86 crore. In FY22 consolidated revenue from operations increased to 13,993. 3 crore as compared to 12,809 was made up of it. In FY 21 there were 35 crore.
The stock fell as the company made more than 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 entrances into Retail, led by mortgages and complemented by shorter tenure loans originated through digital partnerships. Piramal will help with product diversification within Retail 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 reduced our target multiple to 1 x PBV for the Financial Services business due to potential asset quality risks in the Wholesale loan book. We have cut our FY 23 FY 24 Pharma EBITDA estimate by 8% 4% to account for: a longer supply chain challenges in the CDMO CHG segment, a higher raw material cost, and a greater promotional costs in the ICP segment. The brokerage said that we have valued the Pharma business at 17 x EV EBITDA to reach our SoTP-based target price of Rs 2,250 per share FY 24 E based on We maintain our Buy rating.
CLSA has given a buy call on the stock, but it has cut its target price cut to Rs 2,330.
Piramal Enterprises reported a bad Q4, according to the brokerage. After incurring negligible credit costs during the past 7 quarters, the firm incurred 800 crore of credit costs in the lending business. Three wholesale loans were classified as 'Stage 2' this quarter, it added.