scorecardresearchPiramal Enterprises: Emkay sees a 42% upside in the stock

Piramal Enterprises: Emkay sees a 42% upside in the stock

Updated: 22 Sep 2022, 10:41 AM IST
TL;DR.
  • The brokerag firm expects Piramal Enterprises' earnings to compound at 43% over FY22-25E, with the POCI book flow-through forecasted to contribute nearly 25% to earnings.
According to a MintGenie poll, an average of 6 analysts have a ‘strong buy’ call on the stock.

According to a MintGenie poll, an average of 6 analysts have a ‘strong buy’ call on the stock.

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.

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PIEL stock in last one year

"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.

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First Published: 22 Sep 2022, 10:41 AM IST