Demerger of Piramal Enterprises Ltd
Stocksbaazigar is bullish on Piramal Enterprises Ltd (PEL – demerged entity) NBFC business and suggests accumulation on dips strategy on Piramal Enterprises Ltd. Piramal Pharma Ltd which will list on the bourses in the last week of third quarter (post demerger of Pharma business) is growing at the rate of 13% CAGR is also fundamentally good company for the long term investment. NCLT approved demerger of Piramal Enterprises. Stocks of PEL started trading at ex-demerger price from 1st Sept 2022 and analysts started giving bullish views on the demerged entity.
Valuations and Targets in Piramal Enterprises Ltd (PEL) and Piramal Pharma Ltd (PPL) shares.
After studying the fundamentals properly, Stocksbaazigar too believes that conservative target of 1200 is easily possible from the current level. Please note shareholders of Piramal Enterprises will get 4 shares of PPL for every 1 share of PEL post this corporate action. Investors will get Stocks of Piramal Pharma Ltd once it gets listed of stock exchanges. On 2nd Sept 2022 share of PEL closed at 1031.50, while brokerages firms have gives targets of 1250-1391 in Piramal Enterprises Ltd (NBFC business). They are expecting that Piramal Pharma Ltd will list between 190-215 range as it is valued more than Rs. 3800 Crores (including 20% stake of The Carlyle Group). The target for Merged business of PEL was 2650.
The valuation of demerged entity of PEL can be estimated near Rs 34000 Crores. Promoters will continue to hold 44% stake in this company. With more than $9 Bn loan book PEL will become one of the biggest NBFCs of India and can continue to focus more on the growth of their financial services business now. While Piramal Pharma Ltd will become one of the largest listed company in Pharmaceutical sector with more the $1 Bn in revenue. This demerger will unlock great value for the investors. If you have shares of PEL purchased well before Record date of demerger (corporate action), continue to hold it. If you don’t have shares of PEL, you can definitely buy them as they are available at least 20% discount currently.
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