Piramal Enterprises jumps after Q3 profit surges 20% to Rs 724 crore

On a consolidated basis, Piramal Enterprises' net profit jumped 20.28% to Rs 724.19 crore in Q3 December 2019 as against Rs 602.04 crore reported in Q3 December 2018.

Net sales rose 9.06% to Rs 3,805.67 crore year-on-year (YoY). The result was declared during trading hours today, 4 February 2020.

Consolidated profit before tax (PBT) rose 6.67% to Rs 954.80 crore in Q3 December 2019 as compared to Rs 895.08 crore posted in Q3 December 2018. Current tax expenses, for the quarter, fell 27.1% to Rs 133.52 crore compared with Rs 183.17 crore in Q3 December 2018.

Piramal Enterprises (PEL) has surpassed its commitment of bringing in Rs 8,000-10,000 crore of equity during the year, with inflows to the extending to Rs 14,500 crore through several major milestone transactions. Debt-to-equity stood at 1.2x times as of 31 December 2019 with an equity capital of Rs 34,000 crore as of 31 December 2019. The pharmaceutical firm also deleveraged the balance sheet with a debt reduction of Rs 15,000 crore since 31 March 2019.

In its financial services segment, loan book dropped 3.06% to Rs 51,429 crore in Q3 December 2019 from Rs 53,055 crore in Q2 September 2019, amid reduction of large single borrower exposures. The ratio of gross NPAs to gross advances stood at 1.80% as on 31 December 2019 as against 0.9% as on 31 September 2019. The company has witnessed no major 'loss given default' since September 2018, as a result of the strong risk management & governance framework and healthy security cover.

In pharmaceutical segment, PEL's nine-month pharma revenue grew at a CAGR of 16% over last 9 years. The Earnings before interest, tax, depreciation and amortization (EBITDA) margin is at 23% for 9M FY2020 with consistent improvement in margin over last few years.

Commenting on the Q3 performance, Ajay Piramal, the chairman of Piramal Enterprises, has said that, We are pleased to announce consistent performance demonstrated by 14% YoY revenue growth to INR 10,915 Crores and net profit growth by 20% YoY to INR 1,749 Crores for nine months FY2020, especially given the sectoral volatility in the markets that we operate in. By end of FY2020, we will have exceeded our earlier stated commitment of bringing in INR 8,000 - 10,000 Crores of equity in the Company, with inflows of up to ~INR 14,500 Crores, through various initiatives including Preferential Allotment to CDPQ, sale of DRG and our Rights Issue that witnessed active participation from most existing large investors including the promoters.

Our repeated partnerships with marquee global and domestic investors are an affirmation of the robustness of our business model and future growth trajectory. With this capital infusion, our Company is well-capitalized to tap both organic and inorganic opportunities arising from industry consolidation and effectively transform our Financial Services business from a largely wholesale business into a welldiversified financial services business. In our Pharma business, that is consistently delivering robust performance quarter after quarter, we plan to further raise additional equity capital for its future growth. Infusion of additional capital in Pharma is the next step towards unlocking value of the Company, he added.

During the quarter, the board, at their meeting held on 17 January 2020 approved the divestment of entire stake in the Healthcare Insights and Analytics business held by the company directly and through its wholly owned subsidiaries, to Clarivate Analytics and its subsidiaries for an aggregate consideration of $950 million of which $900 million would be received on closing of the transaction and $50 million would be received at the end of 12 months from the closing of the transaction.

PEL is one of India's largest diversified companies, with a presence in financial services, pharmaceuticals and healthcare insights & analytics.

Shares of Piramal Enterprises jumped 4.19% to Rs 1,393.95. The stock traded in the range of Rs 1,344.65 to Rs 1,436 so far.

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