Piramal Enterprises Q2 Review - Steady Quarter, Muted Earnings Without Any Big Ticket One Offs: Motilal Oswal

Motilal Oswal Report

Over the past two years, Piramal Enterprises Ltd. has strengthened its balance sheet by running down its Wholesale loan book; improved texture of its borrowings (driving lower cost of borrowings); and fortified itself against contingencies with expected credit loss provisions at 4.0% of assets under management.

Piramal is cognizant of the sectoral stress in personal loans and calibrated its disbursements in unsecured loans during the last two quarters. Over the next two years, we expect the company to make meaningful inroads into retail, led by mortgages/leave on average pay and complemented by a good mix of unsecured loans. Product diversification within retail will help Piramal deliver strong growth and reduce concentration risks.

We expect Piramal to deliver ~2.1% return on assets and 7.5% return on equity in FY26E.

We acknowledge that Piramal possesses pockets of :

1. deferred tax assets relating to the time of Dewan Housing Finance Ltd. acquisition,

2. recoveries from written-off exposures, and

3. fee income levers that it can leverage to enhance profitability.

We have a target multiple of 0.8 times September 2025 price/book for the lending business.

We reiterate our 'Buy' rating on the stock with a revised target price of Rs 1,200 (premised on September 2025 SoTP).

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