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• This is the maiden debt issue from Piramal group's flagship company.
• It offers lucrative coupon rates with AA/Stable rating from ICRA and CARE.
• The interest payment schedule will be only on annual basis.
• Investors looking for steady returns may consider parking of funds for medium to long term.
• The allotment will be done on "First Come - First Served" basis.
ABOUT COMPANY:
Piramal Enterprises Ltd. (PEL) is the flagship company of the Piramal Group, one of the leading conglomerates in India. The Company is a non-deposit taking, RBI registered systemically important NBFC, engaged in providing wholesale and retail lending. Its retail lending business is primarily conducted through wholly owned subsidiary, Piramal Capital and Housing Finance Company Limited ("PCHFL"), a housing finance company registered with the National Housing Bank ("NHB").
The Company was incorporated on April 26, 1947 under the name 'Indian Schering Limited'. It first entered the pharmaceuticals industry in 1988, following acquisition of Nicholas Laboratories India Limited and have expanded through organic and inorganic growth strategy. Over the years, it has conducted a series of mergers and acquisitions, joint ventures, strategic alliances and various organic initiatives, including entering into the financial services and healthcare insights and analytics space. The Company entered the financial services sector by lending to the real estate sector. Thereafter, it expanded lending platform to serve the needs of corporates and individuals. Until April 1, 2022, the Company was engaged in the business of (i) manufacturing pharmaceutical products and providing a diversified pool of pharmaceutical services through Piramal Pharma Limited ("PPL"); and (ii) providing financial services through our subsidiaries, PCHFL and PHL Fininvest Private Limited ("PFPL").
PEL presently provides (i) wholesale funding solutions to real estate developers, corporates and SMEs across sectors; and (ii) retail funding opportunities including housing finance, loan against property, secured small and medium enterprises ("MSMEs") loans, other secured loans and unsecured loans (including microfinance loans) to individuals and MSMEs. In addition to wholesale and retail lending business, it also has a fund management business which provides customised funding solutions through Piramal Credit Fund. The fund includes capital commitment from various investors including CDPQ. It also has a distressed and special situations investment platform, India Resurgence Fund ("IRF") with Bain Capital Credit, which invests capital directly into businesses and acquires debt of distressed businesses. The company also has presence in the life insurance sector, as it has a 50% shareholding in Pramerica Life Insurance (a joint venture with Prudential International Insurance Holdings), pursuant to its acquisition of Dewan Housing Finance Limited ("DHFL").
PEL's retail lending business primarily focusses on self-employed individuals and MSMEs. The company offers four types of retail loan products, which are (i) home loans; (ii) secured MSME loans; (iii) other secured loans; and (iv) unsecured loans (including microfinance loans). Its wholesale lending business focuses on companies engaged in the real estate sector and certain other sectors such as NBFC/NBFC-FI, healthcare, infrastructure, renewable energy, hospitality, logistics, and auto components. For real estate customers, it provides financing solutions such as early stage financing, structured debt, senior/ junior secured debt, construction finance and flexible lease rental discounting.
As of June 30, 2023, the company had 424 conventional branches, including 136 microfinance branches across 25 states and union territories across India, and 13635 employees on its payroll.
ISSUE DETAILS:
The company is coming out with a Tranche I issue of Secured, Rated, Listed, Redeemable, Non-Convertible Debentures of face value of Rs. 1000 each with a base size of Rs. 200 cr. with a green shoe option to retain oversubscription up to Rs. 800 cr., thus making an overall issue size of Rs. 1000 cr. The company has a shelf limit of Rs. 3000 cr. The issue opens for subscription on October 19, 2023, and will close on or before November 02, 2023. Post allotment, NCDs will be listed on BSE and NSE. PEL is spending Rs. 13.89 cr. for this Tranche I issue process and from the net proceeds, it will utilize at least 75% for onward lending, financing, repayment/prepayment of certain borrowings, and maximum up to 25% for the general corporate purposes.
This issue is jointly lead managed by A. K. Capital Services Ltd., JM Financial Ltd., Nuvama Wealth Management Ltd., and Trust Investment Advisors Pvt. Ltd., while Link Intime India Pvt. Ltd. is the registrar of the issue and IDBI Trusteeship Services Ltd. is the Debenture Trustee.
The company has allocated 20% for Institutional Investors, 20% for Non-Institutional Investors, 30% for HNIs and 30% for Retail investors. The minimum application is to be made for 10 NCDs (i.e. Rs. 10000) and in multiple of 1 NCD (i.e. Rs. 1000) thereon, thereafter.
This issue carries coupon rates ranging from 9.00% to 9.35% and having tenors of 2 yrs., 3 yrs., 5 yrs., and 10 years. The interest payment will be done on annual basis only. Allotment will be done on "First Come - First Served" basis. 9.35% coupon rate is for 10 yrs. term.
ISSUE RATING:
This Issue is rated ICRA AA/Stable by ICRA Ltd. and CARE AA/Stable by CARE Ratings Ltd. Instruments with this rating are considered to have high degree of safety regarding timely servicing of financial obligations. Such instruments carry very low credit risk. The rating issued by ICRA Limited is live until withdrawn or changed and as available on ICRA's website, and the ratings issued by CARE Ratings Limited is valid as on the date of this Tranche I Prospectus and shall remain valid on date of issue and Allotment of the NCDs and listing of the NCDs on Stock Exchanges until the ratings are revised or withdrawn.
These ratings are not a recommendation to buy, sell or hold securities and investors should take their own decisions. In case of any change in credit ratings till the listing of NCDs, the Company will inform the investors through public notices/ advertisements in all those newspapers in which pre issue advertisement has been given
FINANCIAL PERFORMANCE:
On the financial performance front, for the last two fiscals, PEL has posted a total income / net profit of Rs. 7910.89 cr. / Rs. 1662.24 cr. (FY22), and Rs. 9086.74 cr. / Rs. 9968.58 cr. (FY23). FY23 PAT includes gains on demerger of pharma undertaking to the tune of Rs. 8373.72 cr.
Its current debt-equity ratio of 1.60 as of March 31, 2023, will stand enhanced to 1.82 post this issue.
Review By Dilip Davda on October 18, 2023
DISCLAIMER: No financial information whatsoever published anywhere here should be construed as an offer to buy or sell securities, or as advice to do so in any way whatsoever. All matter published here is purely for educational and information purposes only and under no circumstances should be used for making investment decisions. Readers must consult a qualified financial advisor before making any actual investment decisions, based on the information published here. My reviews do not cover GMP market and operators game plans. Any reader taking decisions based on any information published here does so entirely at their own risk. Investors should bear in mind that any investment in stock markets is subject to unpredictable market-related risks. The above information is based on RHP and other documents available as of date coupled with market perception. The author has no plans to invest in this offer.
About Dilip Davda
Dilip Davda is veteran journalist associated with stock market since 1978. He is contributing to print and electronic media on stock markets/insurance/finance since 1985.
Dilip Davda is a leading reviewer of public issues and NCDs in the primary stock market in India. The knowledge he gained over 3 decades while working in the stock market and a strong relationship with popular lead managers makes his reviews unique. His detail fundamental and financial analysis of companies coming up with IPO helps investors in the primary stock market. Dilip Davda has a special interest in analyzing the SME companies and writing reviews about their public issues. His reviews are regularly published online and in news papers.
(Dilip Davda -SEBI registered Research Analyst-Mumbai,
Registration no. INH000003127 (Perpetual)
Email id: dilip_davda@rediffmail.com ).
The Piramal Enterprises NCD Tranche I October 2023 Analysis helps you to understand about the company, offer detail, valuation, capital structure and financial performance. Our SEBI registered NCD Analysts tells you if Piramal Enterprises NCD Tranche I October 2023 worth investing. The Piramal Enterprises NCD Tranche I October 2023 Note sets the NCD expectations in systematic way which tells you if Piramal Enterprises NCD Tranche I October 2023 good to buy (good or bad / yes or no). The NCD Forecast tells you weather to invest in Piramal Enterprises NCD Tranche I October 2023 by providing NCD recommendations i.e. subscribe, avoid and neutral.
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