Piramal Enterprises share price opened at a gain of as much as 1.50% on October 8 after the company announced the demerger of its pharmaceuticals business.
The stock opened at Rs 2931, up to Rs 42.8 from the previous day close of Rs 42.8 on NSE.
“The board of directors of Piramal Enterprises on October 7, approved a composite scheme of arrangement providing for the demerger of the pharmaceuticals business from Piramal Enterprises and simplification of the corporate structure to create two industry-focused listed entities in financial services and pharmaceuticals,” the company said in its release.
“Over the years, Piramal Enterprises has grown multi-fold with diverse businesses under one listed holding company structure. In line with our stated strategy, the Board has today approved the demerger and simplification of our corporate structure, to create two independent listed entities in Financial Services and Pharmaceuticals, with a leadership position across the business segments they operate in,” said Ajay Piramal, Chairman, Piramal Group.
“It will firmly empower both entities to be future-ready and enable them to independently pursue their growth strategies with sharper focus and identity,” he added.
For every 1 share of Piramal Pharma Limited owned by the shareholders, 4 shares will be awarded, in addition to their existing holding in the group.
Mr Puneet Yadu Dalmia has been appointed as an additional director of the business with effect from October 7, 2021, in the capacity of an independent director of the company for a tenure of five years, subject to shareholder approval.
The firm has kickstarted the process of demerging its medicines division to focus only on the group’s financial services division.
As per the report published in Moneycontrol, Motilal Oswal expects the company’s financial services business to make meaningful inroads into retail over the next 3 years.
Product diversification within retail will aid in posting strong growth and lower concentration risk.
“We expect the financial services business (excluding the Life Insurance JV) to deliver ~ 2.3% RoA/10% RoE over the medium term (post building in the DHFL acquisition). We have an unchanged target multiple of 1.8x for the financial services business,” said Motilal Oswal to Moneycontrol.
Our value is pushed ahead to September ’23E. We arrive at a target price of Rs 3,310/share using SoTP and retain our buy recommendation, according to Motilal Oswal.
By 14:20, the stock was trading at a loss of almost 5% around Rs 2754.