After splitting the pharmaceutical business, the Piramal business grew by 37%

NEW DELHI: Following the separation of the pharmaceutical and lending businesses, the brokerage firm maintained a buy rating on the company with a revised target price of Rs 1,320.

The brokerage sees a potential increase of nearly 37% from the current market price of Rs964.65 for the stock in 12 months.

On Friday’s trading day, the script ended 2.33% lower at Rs 964.65. The stock has fallen about 64% in the last year, while it has fallen nearly 42% in the past three months.

Corporate radar

Once classified, PIEL now trades as a diversified NBFC registered with the RBI.

DHFL integration has progressed well. The retail lending business continued to gain traction, with an improvement in disbursement speed. Brokerage firm Motilal Oswal says numerous partnerships with FinTechs and Consumer-Techs have supported momentum in the embedded financial products segment.

The brokerage expects its wholesale loan book to continue to be moderate as it seeks to actively create provisions against stress exposures, and then monetize it. they.

In the retail sector, Motilal projects a disbursement rate / CAGR AUM of ~90% / ~30% in the period 22 to 25E. Consolidation on the wholesale books and strong growth in the retail books will lead to an increase in retail lending’s share to ~55% in the loan structure by year 25E.

Management will now look to expand its loan book, which will lead to consolidation in the wholesale book and strong growth in the retail sector. Even the retail mix will improve, said Motilal Oswal, which could lead to lower borrowing costs and credit rating upgrades.

Motilal added that the company has clearly stated the goals it aspires to achieve in its financial services business by FY27. These include improving retail lending rates to 60-70%, AUM doubled and improved the net debt to equity ratio by 3.5-4.5 times.

This will be achieved by reducing wholesale sales, diversifying its retail structure and expanding its distribution network to 500-600 branches, with a presence in ~1,000 locations within the next 5 years. broker added.

Motilal estimates a CAGR of NPAT of 37% for the period 22-25 / FY22-25, resulting in a FY25 RoA / RoE of 2.2% / ~10%.

(Disclaimer: The recommendations, suggestions, views and opinions expressed by experts are their own. They do not represent the views of The Economic Times)

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