Shares of Piramal Pharma (PPL) listed at Rs 201.80 on the BSE, and at Rs 200 on the National Stock Exchange (NSE) on Wednesday. The stock slipped to a low of Rs 191.75, down 5 per cent from its opening level, on the BSE. It’s inra-day low was Rs 191.35 on the NSE. A combined 1.8 million equity shares had changed hands on the NSE and BSE till 10:06 AM.
The equity shares of PPL have been listed and admitted to dealings on the exchange in the list of ‘T’ group of securities. In the T2T segment, each trade has to result in delivery, and no intra-day netting of positions is allowed.
In October 2021, the board of directors of Piramal Enterprises (PEL) had approved the demerger of the pharmaceuticals business, and simplification of the corporate structure to create two industry-focused listed entities in Financial Services, and Pharmaceuticals.
In consideration of the demerger, 4 fully paid up equity shares of face value of Rs 10 each of PPL were issued and allotted, for every 1 fully paid up equity share of face value Rs 2 each held in PEL.
Post the Carlyle fund-raise for pharma, the company has been investing organically and inorganically across all its pharma businesses. All the company’s key businesses have a compelling plan for their growth, and are executing on the strategic priorities.
The management believes that the company will continue to deliver in line with its long-term growth track record through organic initiatives. “In the medium-to-long term, we expect nearly 15 per cent CAGR revenue growth across the businesses. As we grow revenues we expect to improve our operating margins through better fixed cost absorption and therefore also improve our return on capital employed,” the company said in its FY22 annual report.
PPL has a differentiated business model, comprising Contract development and manufacturing (CDMO; 59 per cent of FY22 sales), complex hospital generics (CHG; 30 per cent of FY22 sales), and India Consumer products (ICH; 11 per cent of FY22 sales).
While PPL has been facing business headwinds over the past 15-18 months, brokerage firm Motilal Oswal Financial Services expects resource hiring to revive the CDMO business, and the easing of Covid-related restrictions to drive the CHG segment.
Assigning 16x/12x/18x EV/EBITDA to the CDMO/CHG/ICH segment on 12 month forward basis and adding value of Allergen JV, the brokerage firm expect fair value to be Rs 210 per share.