High Yield | AA/Stable Rated | Minimum Investment: 10k Only
Bond overview
Piramal Enterprises Limited is issuing the Non-Convertible Debentures. These NCDs are AA/Stable rated by ICRA. The NCDs are being issued in four series: coupon ranges from 9.00% to 9.35% p.a. and different tenures of 2, 3, 5 and 10 years. The NCDs are secured and redeemable in nature.
Coupon rates and effective yield for each of the series 
Allocation Ratio
The allocation ratio is prepared based on norms laid down by SEBI. Before announcing the allocation ratio, the same has to be approved by SEBI. Once the IPO subscription closes, applications will be divided into different categories. The category-wise allocation ratio is always decided and declared during the launch of the particular IPO. Considering the Allocation Ratio, units will be assigned to applicants. Refer to the chart to know the application ratio for Piramal Enterprises Limited NCD-IPO.
Investment Process for Piramal Enterprises Limited NCD IPO
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Financial Overview
Snapshot stating the Revenue, Expenses, PAT (In crores)
Cash flow for last 5 years (In crores)
Cash flow refers to the movement of cash in and out of the business at a specific point in time. It represents the net balance of the cash movement.
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- *Cash flow from operating activities reflects the amount a company generates through its product of services.
- **Cash flow from investing activities reflects cash generated and spent relating to investing activities, like purchase of assets, sales of securities etc.
- ***Cash flow from financing activities gives an insight into the financial stability of a company to its investors. It reflects the net flows of cash that are used to fund the company.
Ratio Analysis
Issue analysis
Pros
- Attractive Coupon Rates: The NCD IPO offers competitive coupon rates of up to 9.35%, providing an appealing income opportunity for investors.
- Diverse Investment Options: With 5 different series and 4 tenures (ranging from 2 to 10 years), investors have the flexibility to choose NCDs that align with their financial goals and risk preferences.
Cons
- Interest rate risk: If interest rates rise in the future, the value of existing NCDs may fall.
- Liquidity risk: NCDs may not be as liquid as other investment options, such as stocks and fixed deposits. This means that it may be difficult to sell NCDs before they mature.
To get better returns than Bank FDs, invest in NCD-IPOs online.
About Piramal Enterprises Limited
Piramal Enterprises Ltd. (PEL) is a diversified financial services company headquartered in Mumbai, India. The company was founded in 1984 by Ajay Piramal, and has since grown to become one of the leading financial services companies in India. PEL has a strong presence in over 25 countries, and a customer base of over 10 million. The company is known for its strong financial performance, and has a long track record of profitability.
PEL is also committed to corporate social responsibility, and has a number of initiatives in place to support the communities in which it operates.
PEL offers a wide range of financial products and services, including:
Strengths
- Robust Capitalization and Optimal Leverage Levels – Over the past four years, the Piramal Group has successfully secured a substantial infusion of equity capital, significantly bolstering the consolidated net worth of PEL.
- Resilient Promoters and a Seasoned Management Team – PEL serves as the holding company for the Piramal Group, under the leadership of Chairman Ajay Piramal. The promoter group has a diversified presence across sectors including financial services via PEL, pharmaceuticals through Piramal Pharma Ltd (PPL), and real estate development and consulting.
- Expansion of Retail Lending within the Asset Under Management (AUM) Mix – PEL has been strategically emphasizing the augmentation of its retail lending portfolio. The acquisition of DHFL in FY23 played a pivotal role in significantly expanding its retail lending portfolio.
Weakness
- Significant Concentration Risk Persists with a Sizeable Wholesale Loan Portfolio – Historically, PEL’s lending portfolio has been predominantly oriented towards wholesale lending, with a notable concentration in the real estate sector.
- Fair to Moderate Asset Quality Across Wholesale and Developing Retail Segments – As of March 31, 2023, the Gross Stage 3 assets across the entire loan portfolio accounted for 3.8% (3.2% of AUM), compared to 3.4% (3.4% of AUM) as of March 31, 2022. Total provisions experienced a slight improvement, reaching 6.2% of AUM as of March 31, 2023, compared to 5.7% in the preceding year.
- Profitability Remains Moderate Due to Elevated Operating Costs and Credit Expenses – PEL’s profitability is characterized by a modest outlook, attributed in part to high operating expenses and credit-related costs.
- Effective Fundraising Ability at Competitive Rates – PEL has demonstrated a noteworthy ability to raise funds at competitive rates. A significant portion of PEL’s borrowings comprises non-convertible debentures (NCDs). Notably, as of March 31, 2023, banks constitute the largest category of lenders, owing to the issuance of NCDs as part of the settlement of their claims during the DHFL acquisition.
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Source – Tranche I Prospectus October 16, 2023
Disclaimer – The information is published as on date 18/10/2023 based on information available onTranche I Prospectus October 16, 2023. The information may be subject to change in case of change in terms of prospectus or any other reason as the case maybe. Contents which are exclusively for educational information/knowledge sharing on capital market concepts and has no influence the investment/sale decisions of any investors.
