Brokerage firm Emkay Global Financial Services has initiated coverage on Piramal Enterprises stock with a buy recommendation.
The brokerage firm has set a target price of ₹1,360, which is a 42% upside from the current market price of the stock.
Piramal Enterprises (PIEL), post the de-merger of its pharmaceutical business, is an NBFC with a presence across retail and wholesale financing and assets under management (AUM) of ₹645.9bn.
"Building on its acquisition of Dewan Housing Finance (DHFL) and capitalized by the infusion of capital of nearly ₹185bn, from stake sales and the rights issue, we forecast PIEL’s loan book to almost double to ₹1.21 trillion by FY27E, at a CAGR of 15%," said Emkay.
"Backed by an experienced leadership team, we forecast the retail portfolio to clock CAGR of 30% over FY22-27E, while the wholesale portfolio is expected to remain flattish. Consequently, the retail assets are expected to constitute nearly 67% of the portfolio in FY27E, up from the current level of 37%," Emkay added.
The brokerage firm expects the company's earnings to compound at 43% over FY22-25E, with the POCI book flow-through forecasted to contribute nearly 25% to revenues.
"RoA/RoE of the consolidated lending business is thus estimated to increase, from 1.2%/4.2% in FY22 to 2.5%/14.1% by FY27E. We initiate coverage on PIEL with a buy rating and a sum-of-the-parts (SOTP) based Sep-23 target price of ₹1,360 per share, valuing the core lending business at 1.03 times Sep-24E BVPS versus the current stock price implied valuation of 0.52 times Sep-24E BVPS for this business," said Emkay.
According to a MintGenie poll, an average of 6 analysts have a ‘strong buy’ call on the stock.
Disclaimer: The views and recommendations given in this article are those of the broking firm. These do not represent the views of MintGenie.
