Shriram stake sale helps Piramal Enterprises report Rs 509 crore profit

A one-time gain of Rs 855 crore from the sale of its stake in Shriram Finance helped Piramal Enterprises report Rs 509 crore consolidated net profit for the April-June quarter, barring which it would have been in deep red, according to a company statement.

In the June 2022 quarter, the company booked a net profit of Rs 8,155 crore. And in the reporting quarter the same printed in at Rs 509 crore led by a gain of Rs 855 crore from the sale of its 8.34 per cent stake in Shriram Finance for Rs 4,820 crore, the company said in a statement.

Chairman Ajay Piramal also announced a buyback of up to 1.4 crore equity shares, representing 5.87 per cent of the pre-buyback fully paid-up equity at Rs 1,250 a share, aggregating to Rs 1,750 crore, through the tender offer route. And the entire process is expected to be completed within 2 months.

He further said the promoter and promoter group shall not participate in the buyback. The Rs 1250 a share offer is a premium of 25 per cent over the last closing price of the stock market intimation date.

Piramal said the buyback is in line with their focus on long-term value creation for stakeholders and effective utilisation of capital. This capital allocation strategy aims to combine investing in our core business and returning excess capital to shareholders.

Considering this buyback and dividends paid over the past 12 months, the company has returned Rs 3,278 crore, he added.

Total assets of the company rose to Rs 63,938 crore, of which retail loans constituted 55 per cent, up from 34 per cent a year ago. Retail loans grew 57 per cent to Rs 34,891 crore. On the other hand, the wholesale book came down by 38 per cent to Rs 26,002 crore and the quarterly wholesale loans grew by 355 per cent to Rs 3,045 crore.

Average borrowing cost came down to 8.6 per cent from 8.8 per cent.

The NBFC’s asset quality improved with gross NPAs falling to 2.8 per cent from 3.8 per cent and net NPAs to 1.5 per cent from 1.9 per cent.

Provision coverage ratio for wholesale book came down to 7.6 per cent from 10.5 per cent, resulting from the sell-down and resolution of a few stressed assets.

Interest income declined 10 per cent to Rs 1,725 crore, while other operating income rose to Rs 189 crore from Rs 58 crore. Of this net interest income fell 22 percent Rs 891 crore.