Piramal Enterprises Limited announces consolidated results for Q1 FY24

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Mumbai, India | July  2023: Piramal Enterprises Limited (‘PEL’, NSE: PEL, BSE: 500302), a leading diversified NBFC, today announced its consolidated results for the First Quarter (Q1) FY2024 ended 30th June 2023.

Consolidated Highlights

  • ▪ Total AUM remains stable at INR 63,938 Cr, while the Retail to Wholesale AUM mix improved to 55:45.
  • ▪ PAT for Q1 FY24 stood at INR 509 Cr2, led by a gain of INR 855 Cr on the sale of the Shriram Finance Limited stake.
  • ▪ Sold 8.34% stake (3.12 Cr shares) of Shriram Finance Limited for INR 4,820 Cr3 at INR 1,545 per share.
  • ▪ Strong consolidated net worth of INR 30,844 Cr with a Capital Adequacy Ratio of 34.3% on the consolidated balance sheet.
  • ▪ Cash and liquid investments of INR 9,613 Cr (12% of Total Assets).
  • ▪ Average borrowing cost for Q1 FY24 reduced to 8.6% from 8.8% in Q1 FY23.
  • ▪ GNPA ratio reduced to 2.8% from 3.8% in Q4 FY23.
  • ▪ NNPA ratio reduced to 1.5% from 1.9% in Q4 FY23.
  • ▪ The Board of Directors has approved a buyback of equity shares of the company of up to 1,40,00,000 equity shares of the face value of INR 2 each representing 5.87% of the pre-buyback fully paid-up equity shares at a price of INR 1,250 per share, aggregating to INR 1,750 Cr, through the tender offer route.
  •  The promoter and promoter group shall not participate in the buyback.
  •  The price of INR 1,250 per share is a premium of 25% over the last closing price of the stock market intimation date.
  •  Considering this buyback and dividends paid over the past 12 months, the company has returned a total of INR 3,278 Cr which is ~16% of the company’s 3 months average market capitalization.
  •  The entire process is expected to be completed within 2 months.

Ajay Piramal, Chairman, of Piramal Enterprises Ltd., said, “In line with our consistent focus on long-term value creation for stakeholders and effective utilisation of capital, the Board of Directors of the company is pleased to announce the buyback of equity shares of the company. The promoter and promoter group shall not participate in the buyback. This capital allocation strategy aims to combine investing in our core business and returning excess capital to shareholders.
Our Q1 performance is in line with our endeavor towards building a large diversified non-banking financial company. In the mid to long term, we aim to have a retail lending account for two-thirds of our assets, reflecting our strategic focus.
In Retail lending, we have achieved sustained growth in the retail sector, fulfilling the credit needs of the “Bharat” market through our technology-led multi-product franchise. This business now contributes to 55% of our AUM. While we actively expand our retail lending business, we are simultaneously investing in human resources, branch infrastructure, technology, and analytics to ensure its future growth.
In Wholesale lending, we are capitalising on market gaps and leveraging our strengths to build the new cash flow and asset-backed Wholesale 2.0 book across real estate and corporate mid-market lending. We have reduced our Wholesale 1.0* AUM by 38% YoY. Our Stage 2 + 3 AUM has reduced by 34% QoQ and we are focused on further bringing these down.”

  • Key Business Highlights
    Retail Lending
    AUM
    – Retail AUM1 grew 57% YoY to INR 34,891 Cr, contributing 55% to the overall AUM mix.
  •  Disbursement Growth
    – Quarterly disbursements grew 132% YoY to INR 5,707 Cr.
    – Housing disbursements grew 128% YoY to INR 1,908 Cr.
    – Disbursement yields4 improved to 14.7% from 14.2% in Q4 FY23.
  •  Scale and Presence
    – 423 branches serving 587 districts across 25 states.
    – Customer franchise now stands at ~3.3 Mn; Active customers stood at 1 Mn.
    – >2.8 lakh new customers acquired during the quarter.

Wholesale Lending

             AUM

  • – Wholesale 1.0* AUM reduced by 38% YoY to INR 26,002 Cr; Wholesale Stage 2+3 assets reduced by 34% QoQ to INR 4,201 Cr.
    – Built Wholesale 2.0^ AUM worth INR 3,045 Cr across Real Estate and Corporate Mid-Market Lending (CMML).
  •  Asset Classification and Provisioning
    – Provision Coverage Ratio of Wholesale AUM reduced to 7.6% from 10.5% in Q4 FY23, resulting from sell down and resolution of a few stressed assets.
    – Generated over INR 2,431 Cr of net cash realisation in Q1 FY24 through accelerated repayments and resolution proceeds of Wholesale 1.0* portfolio in line with the provisions on these assets

– Concluded sale of certain wholesale loans including loans acquired from DHFL, through two separate ARC transactions in Q1 FY24.
– Security Receipts (SR) were issued worth INR 2,004 Cr and cash received worth INR 316 Cr after a markdown of 62%.
– Various SR transactions consummated have been appropriately provided for over the quarters.
– SR portfolio is expected to reduce in the future via a combination of sales, enforcement, and collections at our carrying value. We have dedicated teams focused on these resolutions.

Liability Management

– We continue to focus on diversifying our borrowing mix including securitization.
– The fixed: floating rate debt mix has improved to 57:43 and will continue to see further improvement in the next few quarters.
– Our cost of borrowings has improved to 8.6% from 8.8% in Q1 FY23.
– Our ALM is well-matched with positive gaps across all buckets.