Piramal Enterprises Ltd Q3 FY23 Earnings Conference Call Insights

Key highlights from Piramal Enterprises Ltd (PEL) Q3 FY23 Earnings Concall

Q&A Highlights:

• [00:16:30] Abhijit Tibrewal from Motilal Oswal asked about asset quality and the related provisions, if PEL can draw the comfort that it has fully provided on the stressed wholesale exposures. Ajay Piramal Chairman said the recognition cycle is largely completed from an asset quality recognition perspective.

• [00:16:37] Abhijit Tibrewal from Motilal Oswal enquired if PEL is still adhering to the timeline of exceeding investments in Shriram Group by March ’23. Ajay Piramal Chairman said PEL continue to hold the listed share on its balance sheet. Going forward, whether it is a mark-to-market gain or loss, PEL will continue to monitor it and inform investors of any decisions made.

• [00:23:36] Shreya Shivani from CLSA enquired about the interest reversal for 3Q23. Upma Goel CFO answered that during 3Q23 the company reversed INR58 crores.

• [00:23:42] Shreya Shivani from CLSA also asked since product mix is rapidly changing between retail and wholesale, what’s the run rate credit cost assumption. Ajay Piramal Chairman answered that credit cost for the business model that the company is striving towards would be in the 1-2% range. Currently, due to high levels of provisioning and the de-growing wholesale book, this metric might look different in the short term.

• [00:33:24] Nischint Chawathe from Kotak asked how much interest rates PEL has raised over the last 4-5 quarters. Ajay Piramal Chairman answered that on the portfolio about 50 bps and in terms of new originations about 30 bps on the home loan side.

• [00:39:31] Gopinath from PNR Investments queried why PEL is not retaining Shriram when that business is doing good. Ajay Piramal Chairman said it is possible to directly own Shriram shares, but it may not be the most beneficial option for shareholders. PEL will look into the various possibilities over the coming months and let shareholders know when there is something to disclose.

• [00:50:03] Bhaskar Basu at Jefferies asked about AIF amount being stable for some time but in 3Q23, there’s a INR2,000 crore increase. Ajay Piramal Chairman answered that this quarter the only increase would be in the form of one resolution that PEL has done.

• [00:52:38] Sandeep Jain of Baroda BNP asked about the operating cost guidance. Ajay Piramal Chairman answered opex to assets was historically 1.3%, but is currently at 3%. As PEL continues to make investments in retail, this number will stay around 3% for another year or so. In the medium term, the expectation is for it to be in the 2.5-3% range with wholesale being 1 and retail being 3.