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Piramal Enterprises (PIEL) hosted its Investor Day on August 28, where the top management reaffirmed its earlier-stated ambition to double FY23 loan AUM by FY28 (Rs1.2-1.3trn) and deliver a consolidated RoA of ~3%. Importantly, the strategy to achieve this medium-term target was also reiterated as being a 70:30 retail to wholesale AUM mix. In retail, the approach is multiproduct offering to target the customers of Bharat without directly competing with large banks; while in wholesale, the focus is to build a granular book in Real Estate and Corporate Mid-Market Lending (CMML). Overall, the company is on the right track to deliver profitable growth and, more importantly, to deploy or distribute the capital for (in)organic growth or for distribution to shareholders. We reiterate our BUY rating with an unchanged target price of Rs1,230.

Powered by capital, credible team and technology, PIEL’s management reaffirms its target and strategy

On its Investor Day on August 28, the top management of PIEL reaffirmed its target to nearly double its FY23 AUM (Rs640bn) by FY28 (~Rs1.2-1.3trn) and achieve consolidated RoA of ~3%. Importantly, management also reiterated its strategy to achieve its FY28 targets, which anchor around ~23% CAGR in retail AUM, driving total AUM CAGR of ~15% over FY23-28, leading to a Retail:Wholesale AUM mix of 70:30 by FY28. With an improving mix of high-yielding assets and economies of scale playing out, retail RoA will improve to 2.5-3.0% by FY28 from current breakeven levels. In wholesale, continued reduction in wholesale 1.0 and redemption of Security Receipts and other non-interest bearing assets, RoAs will improve to 3.5-4.0%. The Alternative Assets business aims to grow to USD3.5bn AUM by FY28 from ~USD1bn in FY23 and the Life Insurance business aims to grow its APE at a 50% CAGR over this period from a smaller base.

Reaffirmation of strategy and target comforts Wholesale 1.0 outcome

The reaffirmation of target and strategy comes as a big comfort suggesting that management is happy with its current journey and is confident about the outcome of its Wholesale 1.0 portfolio, which has been of some concern to certain investors. Looking ahead, management also remains clear about its multiproduct and high-touch and hightech approach to address Bharat’s customers without clashing with large banks.

Reiterate BUY with a TP of Rs1,230

The Investor Day commentary has reassured us about the company progressing on the right track with clear tangible milestones set for itself. Clarity about the core activity, periphery activity, unlocking the value from financial investments and finally the optimal utilization of capital came as a great comfort. Overall, PIEL seems to be progressing well on its medium-term plan of delivering 3% RoA and should be assessed over the mediumterm outlook and beyond the near term. We reiterate our BUY rating on the stock, with an SoTP-based Jun-24E target price of Rs1,230/share

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