Mutual Funds Commodities Research Tax Planning IPO Our Team Contact Us  
Google
Web www.equitybulls.com
Research

| More

Piramal Enterprises - Much awaited demerger announced; to strengthen governance and create value - ICICI Securities

Posted On: 2021-10-10 15:37:36 (Time Zone: IST)


Piramal Enterprises (PEL), post DHFL acquisition and integration, has now announced the much awaited demerger of its pharma business and simplification of the corporate structure. Board has approved a scheme of arrangement with the objective of transforming the group from a multi-sector conglomerate into two separate sector-focused listed entities in financial services and pharma business. The demerger will: 1) strengthen the governance architecture for the businesses with separate dedicated Boards and management teams; 2) create an optimal capital structure for each of the two businesses; 3) empower and enable both the entities to independently pursue their growth strategies (organically and inorganically) with sharper focus; 4) trigger value-unlocking for PEL shareholders. The demerger is subject to shareholders, creditors and regulatory approvals and the process is expected to take another 9-10 months. We earlier highlighted this as a trigger to further drive up valuation with optimal capital allocation. Maintain HOLD with a revised SoTP-based target price of Rs2,933 (earlier: Rs2,797). Effectively leveraging the acquired DHFL network to cross-sell existing retail products will be key going forward. We continue to await visibility on utilisation of unallocated equity (an optional value).

Scheme of arrangement primarily to simplify corporate structure:

  • Demerge the pharma business and list it separately
    • The pharma business will get vertically demerged from PEL and consolidated under Piramal Pharma (PPL). Post the demerger, PPL will be listed on BSE and NSE.
    • Two operating subsidiaries, wholly-owned by PPL, will also be amalgamated with PPL to further simplify the pharma corporate structure. They are: 1) Hemmo Pharma Private Limited (focused on development of peptide APIs and manufacturing capabilities), and 2) Convergence Chemical Private Limited (for development, manufacture and sales of speciality fluorochemicals).
  • Financial services structure: NBFC at holdco level with 100% HFC subsidiary
    • PHL Finvest Private Limited, 100% owned NBFC subsidiary of PEL, will be amalgamated with PEL to create a listed NBFC.
    • The merged housing finance company, post the DHFL acquisition, will remain a wholly-owned subsidiary of PEL.
  • No change in PEL shareholding structure; 4:1 equity share consideration
    • Shareholders of PEL will get 4 equity shares of PPL for every 1 equity share in PEL, in addition to their existing holding in PEL. Both the companies will be separately listed on NSE and BSE.
    • Shareholders of PEL will directly own shares in both the listed entities, without any cross-holdings and minority stakes.
    • No change in the shareholding pattern of PEL pursuant to the demerger.
  • Consolidated equity includes Rs68bn towards pharma; Rs110bn unallocated
    • Compared to the Rs53bn equity allocated towards pharma business in Jun'21, the management highlighted that the demerged PPL will have an equity of Rs68bn.
    • Rs110bn will be retained at PCHFL and its 'net debt to equity' post DHFL integration will be 3.5x in the near term.
    • Balance equity of Rs170bn will be housed under PEL against which it would be holding assets of Rs90bn-100bn.
    • PEL generally tends to maintain cash and cash equivalent of Rs70bn in the financial services business, which will continue even post the demerger.
  • Other highlights:
    • There will be no tax on this scheme of arrangement, and the demerger and merger of entities will not lead to any incremental tax liability.
    • With respect to life insurance, which PCHFL will inherit from DHFL integration, it is still evaluating various optionalities available.
    • Cash from DHFL balance sheet (of Rs125bn as of Jun'21) has been utilised to repay its creditors and further Rs22bn was raised by PCHFL.


    Shares of Piramal Enterprises Limited was last trading in BSE at Rs. 2736.05 as compared to the previous close of Rs. 2886.40. The total number of shares traded during the day was 111220 in over 10110 trades.

    The stock hit an intraday high of Rs. 2957.30 and intraday low of 2727.80. The net turnover during the day was Rs. 309794116.00.

    Shares of Piramal Enterprises Limited was last trading in NSE at Rs. 2736.25 as compared to the previous close of Rs. 2888.20. The total number of shares traded during the day was 2561863 in over 131744 trades.

    The stock hit an intraday high of Rs. 2943.30 and intraday low of 2728.00. The total traded value during the day was Rs. 7128328291.00.


Click here to send ur comments or to feedback@equitybulls.com

Disclaimer:The article above is a gist / extract of the original report prepared by the research firm / brokerage firm. This article is not to be considered as an offer to sell or a solicitation to buy any securities. This article is meant for general information only. www.equitybulls.com, its employees or owners or the research firms, its employees or owners won't be responsible for any liability that may arise from information, errors or omissions in these articles. www.equitybulls.com or its employees or owners / the research firms or its employees or clients or owners may from time to time hold positions in securities referred in this article. For detailed research reports, please contact the concerned research firm directly.





Other Headlines:

Mphasis - 2QFY22 Result Update - Growth Resiliency Continues; Raise Target Price - Reliance Research

Maintain ADD on Havells India - Outperformance continues; miss on margin - HDFC Securities

Indraprastha Gas - Company Update - EV vs CNG; TCO Economics Favour CNG - Reliance Research

FinTech Playbook - Discount Brokers - 'Nudging' the long tail of standalone brokers - HDFC Securities

Tata Communication - Revenue growth remains muted - YES Securities

Havells India Ltd - Q2FY22 Result Update - YES Securities

ICICI Lombard General Insurance - Q2FY22 Result Update - YES Securities

Syngene International Ltd - Lack of near term triggers - YES Securities

Mphasis - Q2FY22 First Cut - YES Securities

IndiaMART InterMESH - Q2FY22 First Cut - YES Securities

Sterlite Technologies - Q2FY22 First Cut - YES Securities

Can Fin Homes - Q2FY22 First Cut - YES Securities

Havells India - 2QFY22 Result Update - Strong Revenue Growth; Higher Commodity Prices Impact Earnings - Reliance Research

TVS Motor - 2QFY22 Result Update - Healthy Exports Coupled with New Launches to Aid Higher Margins - Reliance Research

Maintain SELL on Jubilant FoodWorks - No big fireworks unlike in other discretionary names - HDFC Securities

Sonata Software - Strong execution - HDFC Securities

Navin Fluorine International - Muted performance - HDFC Securities

Maintain ADD on Heidelberg Cement - Cost pass-through efforts to protect margin - HDFC Securities

Maintain BUY on Mastek - Minor misses, recovery underway - HDFC Securities

Oil and Gas - Q2FY22 Results Preview Report - HDFC Securities

Building Materials - Q2FY22 Results Preview Report - Strong recovery! - HDFC Securities

Jubilant Foodworks - Soft SSSG in the quarter but record store openings points to strong outlook ahead - YES Securities

L&T Technology Services - Overall, performance was ahead of expectations - YES Securities

Just Dial Ltd - Both revenue and EBITDA below expectation. PAT boosted by higher other income - YES Securities

Syngene International Ltd - Lower gross margin lead to EBIDTA miss - YES Securities

GMR Infrastructure - Airports to drive value; initiate with a HOLD - ICICI Securities

ICICI Prudential Life Insurance - Business mix more balanced than ever; volume vs margin pose near-term quandary - ICICI Securities

HeidelbergCement India - Margins impacted by cost escalations - ICICI Securities

Navin Fluorine International - Revenue growth still some time away - ICICI Securities

Havells India - Strong volume led revenue growth - ICICI Securities

Q3CY21 Result Update - ACC Ltd - ICICI Direct

Q2FY22 Result Update - 5paisa Capital - ICICI Direct

Q2FY22 Result Update - Hindustan Unilever - ICICI Direct

Tata Communications - Q2FY22 First Cut - ICICI Direct

Q3CY21 Result Update - Nestle India - ICICI Direct

HeidelbergCement India - 2QFY22 Result Update - Steady Volume and Better Realizations Aid Performance - Reliance Research

Maintain BUY on UltraTech Cement - Strong demand moderates impact of cost inflation - HDFC Securities

ACC - 2QFY22 Result Update - Performance Beat Despite Elevated Input Costs - Reliance Securities

Maintain ADD on L&T Infotech - Riding the wave - HDFC Securities

Maintain REDUCE on Hindustan Unilever - Miss in volume, no respite on margin front - HDFC Securities

Maintain REDUCE on Nestle India - Revenue momentum sustains; miss in margin - HDFC Securities

L&T Technology Services - ER&D leadership shines through - HDFC Securities

Maintain BUY on ACC - Mixed performance - HDFC Securities

Power Plus - Demand remains strong but coal stock is critical - HDFC Securities

At 11-year high, BSE Realty Index still lower than 2008 peak

Leveraged financials - 2QFY22E Results Preview Report - HDFC Securities

UltraTech Cement - Revenue Inline, inflated cost dragged EBITDA - YES Securities

Craftsman Automation - Q2FY22 First Cut - YES Securities

Ultratech Cement - 2QFY22 Result Update - Elevated Costs Pressure Led To Earnings Miss - Reliance Securities

L&T Infotech - Q2FY22 Result highlights - YES Securities


Website Created & Maintained by : Chennai Scripts
West Mambalam, Chennai - 600 033,
Tamil Nadu, India

disclaimer copyright © 2005 - 2020