Piramal Enterprises share price rose more than 2% in the early trade on October 8 after the organization had reported the demerger of its pharmaceuticals business.
“The board of directors of Piramal Enterprises on October 7, approved a composite scheme of arrangement providing for the demerger of the pharmaceuticals business from Piramal Enterprises and simplification of the corporate structure to create two industry-focused listed entities in financial services and pharmaceuticals,” company said in its release.
“Over the years, Piramal Enterprises has grown multi-fold with diverse businesses under one listed holding company structure. In line with our stated strategy, the Board has today approved the demerger and simplification of our corporate structure, to create two independent listed entities in Financial Services and Pharmaceuticals, with a leadership position across the business segments they operate in,” said Ajay Piramal, Chairman, Piramal Group.
“It will firmly empower both entities to be future-ready and enable them to independently pursue their growth strategies with sharper focus and identity,” he added.
Shareholders of Piramal Enterprises (PEL) will get 4 shares of Piramal Pharma Limited for each 1 share in PEL, notwithstanding their current holding in PEL.
The board has designated Mr. Puneet Yadu Dalmia as an extra director of the organization with impact from October 7, 2021 to hold office as independent director of the organization for a term of 5 years, dependent upon the endorsement of the shareholders.
Research house has kept an outperform rating on the stock with an target at Rs 2,960 per share.
The organization has started the demerger process of its pharmaceuticals business and would focus just on the financial services business of the group.
The organization believes the two businesses are satisfactorily capitalised for organic & inorganic growth, added CLSA.
Throughout the next three years, we anticipate that the company’s financial services business should make significant advances into retail.
Product diversification within retail would assist the organization with delivering strong development and lower concentration hazard.
We expect the financial services business (excluding the Life Insurance JV) to deliver ~ 2.3% RoA/10% RoE over the medium term (post building in the DHFL acquisition). We have an unchanged target various of 1.8x for the financial services business.
We move ahead our valuation to Sep ’23E. Using SoTP, we show up at an target cost of Rs 3,310/share and keep up with our purchase rating, said Motilal Oswal.
At 09:18 hrs Piramal Enterprises was citing at Rs 2,908.70, up Rs 22.30, or 0.77 percent on the BSE.
The share touched a 52-week high of Rs 3,013.00 and a 52-week low of Rs 1,198.90 on 07 October, 2021 and 29 October, 2020, respectively.
At present, it is trading 3.46 percent underneath its 52-week high and 142.61 percent over its 52-week low.
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