Piramal Enterprises tumbles 10% after posting net loss of Rs 1,703 cr in Q4

Shares of Piramal Enterprises slipped 9.68 per cent to Rs 842 on the BSE on Tuesday after the company reported a net loss of Rs 1,703 crore in the March quarter of financial year 2019-20 (Q4FY20) compared to a net profit of Rs 455 crore in the corresponding quarter last year.

The company reported a consolidated pre-tax loss of Rs 1,296 crore during the quarter, as opposed to a pre-tax profit of Rs 678 crore in the same period last financial year because of incremental provisioning in its financial services business on account of Covid-19.

Its revenues were down 2 per cent to Rs 3,341 crore in Q4FY20 from Rs 3,409 crore in Q4FY19 whereas for the whole year (FY20), the company’s revenue was up 10 per cent at Rs 13,068 crore. Financial services arm saw 8 per cent growth in revenue while the pharma arm registered a 13 per cent growth. The net interest margin, a measure of profitability in the financial services business, stood at 5.2 per cent.

The company made provisions in the financial services business to the tune of Rs 2,963 crore in Q4FY20, up more than 200 per cent, which includes incremental provision of Rs 1,903 crore for Covid-19.

The loan book of the company at the end of the March quarter stood at Rs 50,963 crore, of which its wholesale real estate is 70 per cent of the book and retail financing is just 11 per cent. However, the wholesale loan book has shrunk 12 per cent in FY20 to Rs 45,429 crore and the exposure to top 10 borrowers has also shrunk by 23 per cent.

It has maintained a capital adequacy ratio of 31 per cent at the end of March quarter, and has also reduced the gross debt to equity ratio to 2.6x as of March 2020, from 3.9x at the end of March, 2019.

As far as the pharma business is concerned, the revenue for Q4FY20 was up 10 per cent at Rs 1,623 crore compared to Rs 1,476 crore in Q4FY19. The management said, operations continued at all the sites globally and for the whole year revenue was up 13 per cent to Rs 5,419 crore while EBIDTA reached Rs 1,400 crore. Moreover, the process of fundraising is on track in the pharma business by issuing a minority stake to potential financial investors and at the appropriate time, stake in the Shriram Group will be monetized, the management said.

“We had at the onset said we will strengthen our balance sheet by bringing in equity and in the year, we have brought in Rs 14,500 crore capital in the company. The equity base has increased to Rs 30,500 crore”, said Ajay Piramal.

At 9:45 AM, the stock was down 8.94 per cent at Rs 848.90 as compared to 1.35 per cent fall in the S&P BSE Sensex. Around 21.6 lakh shares have changed hands on the counter on the BSE and NSE combined, so far. The stock hit its 52-week low of Rs 608 on March 24, 2020.