Piramal Enterprises’ stock surged by 8% following the announcement of the sale of its subsidiary.
Piramal Enterprise: The Non-Banking Financial Company (NBFC) sector in India is a crucial player in providing a wide range of financial services, such as loans, asset management, and investment services, particularly in areas where traditional banks are lacking. Key players in this sector include Bajaj Finance, Manappuram Finance, HDFC Ltd., and Shriram Transport Finance.
NBFCs are also actively involved in trading securities, with companies like Reliance Capital, Piramal Enterprises Limited, ICICI Securities, and Kotak Mahindra Capital offering these services. Given India’s expanding middle class, rising demand for credit, and supportive regulatory environment, the NBFC sector is poised for significant growth, especially in retail financing, securities trading, and infrastructure funding.
In terms of share price, Piramal Enterprises is currently trading at Rs. 1,022.4, marking a 7.86% increase from its previous close of Rs. 947.9. The stock also reached an intraday high of Rs. 1,028 on January 14, 2025.
Financial Performance
During the second quarter of fiscal year 2025, the company experienced a remarkable 22% year-on-year increase in interest income, soaring from ₹1,800 crore in the same period of fiscal year 2024 to ₹2,198 crore. Additionally, the net interest income (NII) also witnessed a substantial 17% growth, climbing from ₹750 crore to ₹881 crore.
The pre-provision operating profit (PPOP) exhibited a significant 58% increase, from ₹250 crore in the second quarter of fiscal year 2024 to ₹396 crore in the second quarter of fiscal year 2025, showcasing robust operational performance. Furthermore, the net profit demonstrated an impressive 238% year-on-year growth, escalating from ₹48 crore in the second quarter of fiscal year 2024 to ₹163 crore in the second quarter of fiscal year 2025.
This notable enhancement in profit was primarily fueled by higher interest income and a substantial increase in PPOP, while operating expenses grew at a slower rate.
Recent Update
In 2018, Piramal Enterprises divested its step-down subsidiary, Piramal Imaging SA, to Alliance Medical Acquisition Limited (AMAL), with the agreement including deferred consideration based on the future performance of the Imaging Group. Life Healthcare Group, a South African multinational healthcare company, is the owner of AMAL and has recently made the decision to sell a portion of this business—Life Molecular Imaging Limited. This sale is contingent upon shareholder approval and regulatory clearances.
Upon completion of the sale, Piramal Enterprises is poised to receive an estimated USD 140 million in FY 2026. Furthermore, there is potential for the company to earn up to USD 200 million in total, contingent upon future profits and earnouts from the Imaging Group. This anticipated influx of funds will significantly enhance Piramal Enterprises’ liquidity and cash flow, providing it with greater financial flexibility.
This transaction will enable Piramal Enterprises to fortify its balance sheet and bolster its financial standing. By divesting a non-core asset, the company will have more resources to allocate towards its core business areas such as pharmaceuticals, healthcare, and financial services.
Additionally, this deal presents an opportunity for Piramal Enterprises to pursue strategic growth initiatives, enhance shareholder value, and ensure the long-term sustainability of its business. Overall, it signifies a positive development for the company’s future prospects.
About the Company
Piramal Enterprises serves as the holding company of the Piramal Group, under the leadership of Chairman Ajay Piramal. The company maintains a robust presence across various industries, with primary operations in financial services through Piramal Enterprises, and pharmaceutical services through its subsidiary Piramal Pharma Ltd (PPL). PPL specializes in Contract Development and Manufacturing (CDMO), Critical Care, and Over-the-Counter (OTC) products.
In addition to its financial and pharmaceutical ventures, the group is also engaged in real estate development and consulting through a separate entity. This diversified business model enables Piramal Enterprises to capitalize on synergies across various sectors and seize growth opportunities, solidifying its position as a key player in both the Indian and global markets. The company’s extensive portfolio underscores its dedication to innovation, operational excellence, and the creation of lasting value for stakeholders.
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Disclaimer: This blog post is for informational purposes only and should not be considered financial advice. Investors should conduct thorough research and consult with a qualified financial advisor before making any investment decisions.