Piramal Enterprises shares fall over 6% despite Q4 profit; brokerages remain bearish

Piramal Enterprises shares in Thursday (May 6, 2024) morning deals fell up to 6.2 per cent at day’s low reaching levels of Rs 839.85. The sharp losses in the stock were triggered following the company’s announcement of its Q4 earnings after market hours on Wednesday. 

The non-banking financial company reported a consolidated profit of Rs 137 crore for the quarter ended March 31, aided by a one-time gain of Rs 1517 crore due to the reversal of AIF provisions. In the previous December quarter, the company posted a loss of Rs 2378 crore as it had set aside Rs 3540 crore for such provisions.

In Q4FY23, the company posted a consolidated loss of Rs 196 crore.Too many One offs, NIM have increased, Guidance for FY28 is good, also announced merger and acquisition.

Net interest income at the financial institution declined 17.7 per cent on year to Rs 755 crore in the March quarter. NIM or net interest margin, a measure of the company’s profitability and growth, came in at 6.8 per cent versus 6.4 per cent in the previous December quarter.

What brokerages recommend for Piramal Enterprises after its Q4 show?

Global brokerage Jefferies has maintained its ‘underperform’ rating on the stock and has raised the target price by a marginal to Rs 785 from the earlier Rs 775. The brokerage held that the company’s PAT was higher at Rs 140 crore due to multiple one-off gains.  Growth in retail loans at the NBFC remained strong, while it continues to unwind legacy wholesale book. The brokerage has slashed its FY25-26 estimates and also projects that low-interest earning assets, high opex & provision should cap RoA/RoE below 1 per cent/4 per cent over FY 25-26.

Hong Kong-based global brokerage CLSA also maintains its ‘reduce’ rating with a target of Rs 950, suggesting a potential upside of over 6 per cent. The brokerage highlighted that the company's performance was poor on the asset quality front. Also, the company's large loss was marked by one-off gains. Further, it added that the company's AUM growth is tepid at 8 per cent on year in FY24 as wholesale book’s planned run-down continues. Moreover, the NBFC's retail mix is now at 70 per cent.