CLSA upgrades Piramal Enterprises to ‘buy’, trims target price
CLSA upgrades Piramal Enterprises to ‘buy’ from ‘outperform’ but brings down its target price to Rs 2,800 from Rs 2,850. Piramal Enterprises shares give up most of initial gains on Thursday, after rising as much as 2.8 percent to Rs 2138.6.
The company’s lending business is trading at an attractive price-to-book ratio of 0.7 times, according to the brokerage, which lowers its value for Piramal’s pharma business from Rs 1,100 to Rs 1,055, and its EBITDA estimates by 1-3 percent citing higher input costs. Its RoE estimate of 10-11 percent does not factor in upside from DHFL’s NPL recoveries and the impact of deferred tax assets.
Here are some highlights of what CLSA says:
–Piramal has corrected 15 percent in past one month probably due to concern over NCLAT order regarding fraud book of DHFL
–No downside from this legal case
–Integration of DHFL on track; business should be in full flow from second half of FY23
–Expect 15 percent retail loan book CAGR once DHFL up and running (Read more)