Piramal Enterprises Ltd Q4 FY22 Earnings Conference Call Insights

Key highlights from Piramal Enterprises Ltd (PEL) Q4 FY22 Earnings Concall

Management Update:

• Over the next five years, PEL aspire to achieve a retail wholesale mix of two-thirds retail and one-third wholesale. PEL said it wants to double the AUM of the Financial Services business from FY22. PEL will also have significant retail growth with retail disbursements growing at 40-50% on a five-year CAGR basis.

• PEL is looking to expand its branch network further by adding 100 branches in FY23. Over the next five years, PEL target to have presence across 1,000 locations with over 500-600 branches.

Q&A Highlights:

•  Tushar Manudhane from Motilal Oswal asked about subdued margins in 4Q22. Ajay Piramal Chairman said that some of PEL’s deliveries which were scheduled for 4Q could not get delivered because of various execution issues more specifically at the overseas sites. So some of them will spill over to 1Q23.

• Tushar Manudhane from Motilal Oswal asked about phenomenal growth in consumer products and outlook for 2-3 years. Ajay Piramal Chairman replied that PEL had consciously decided to reinvest profits back into the consumer products business and significantly increase the media spend. In the mid-term, PEL expects the consumer products to grow at about 20% with continued focus on growing the power brands through a lot of media and trade spend.

• Abhishek Sharma from Jefferies asked about FY23 pharma guidance and the growth expectation. Ajay Piramal Chairman said that for FY23 specifically the company is targeting a growth in the high teens for revenue. In terms of margins on a volatile environment, it’s not right to give any number.

• Abhishek Sharma from Jefferies enquired that is it safe to say that 25-28% margin guidance is more back ended and any time frame to achieve it. Ajay Piramal Chairman said that it’s over a 3-5 year period that the company is targeting to achieve the margin range.

• Deepak Gupta of SBI Pension Funds asked about the current restructured book now. Ajay Piramal Chairman replied that it’s the same as mentioned last quarter; almost 3% of the company’s wholesale loan book.

• Bhaskar Basu from Jefferies asked about the retail NPL of about 1%, if it pertains to the DHFL book or the new businesses generated over the last 6 months. Ajay Piramal Chairman said it’s all going to be the legacy book; the new book has not had enough time to get into NPA.