Piramal Enterprises slips 9% to hit 52-week low; stock slumps 11% in 2 days

In the past two days, the stock slipped 11 per cent after the RBI directed M&M Financial Services to immediately cease any recovery or repossession activities via an outsource till further orders.

Shares of Piramal Enterprises hit 52-week low of Rs 869.40, as they slipped 9 per cent in Monday’s intra-day trade. The stock of financial services company fell below its previous low of Rs 900.70, that it had touched on June 20, 2022, data shows.

In the past two trading days, the market price of Piramal Enterprises tanked 11 per cent after the Reserve Bank of India (RBI) directed Mahindra & Mahindra (M&M) Financial Services to cease any recovery or repossession activities via an outsource till further orders.

"The action is based on certain material supervisory concerns observed in the said non-banking finance company (NBFC), with regard to the management of its outsourcing activities. However, the NBFC may continue to carry out recovery or repossession activities, through its own employees," the RBI had said on September 22.

At 11:47 am; shares of Piramal Enterprises traded 6 per cent lower at Rs 895, as compared to 1.6 per cent decline in the S&P BSE Sensex.

Piramal Enterprises, post the de-merger of its pharmaceutical business, is a NBFC with presence across retail and wholesale financing, and assets under management (AUM) of Rs 64,590 crore.

Over the next 5 years, the company aims to expand presence across 1,000 locations (with 500-600 branches) across India and their phygital retail lending business.

“We also plan to continue to build newer partnerships in our embedded finance business, resulting in 40-50 per cent growth in retail disbursements (on a CAGR basis). This, will enable us to double the overall AUM from FY22 levels, despite reduction in our existing wholesale book (in line with our strategy to make it more granular), resulting in our loan book mix moving towards two-third retail loans and one-third wholesale loans,” Piramal Enterprises said in their FY22 annual report.

With scalable, tech-driven lending platform, significant firepower for organic growth and acquisitions (given our low debt/equity of the FS business at 2.7x), and considerable value-unlocking potential (i.e. investments in Shriram), the company remains well-poised to become one of the largest, top quality NBFC in the coming years, the management said.

Meanwhile, analysts at Motilal Oswal Financial Services remain optimistic of the NBFC's retail lending business and expects the company to gain traction as disbursement run-rate improves.

"Multiple partnerships with fintechs and consumer-techs have aided the momentum in the embedded finance product segment.” We expect wholesale loan book to moderate as the company looks to aggressively create provisions on stressed exposures, and monetize them,” the brokerage firm said.