Piramal Enterprises approves share buyback worth ₹1,750 cr

The board of Piramal Enterprises Ltd has approved a share buyback worth ₹1,750 crore of up to 1,40,00,000 (1.4 crore) shares of face value ₹2 each. The diversified NBFC, in a stock exchange filing, says the share buyback represents 5.87% of the total paid-up equity share capital at ₹1,250 per equity share, a premium of 16.51% over Friday's closing price of ₹1,072.80.

The buyback is proposed to be made from the shareholders on a proportionate basis under the tender offer route. "The Board of Directors have approved a buyback of equity shares of the company of up to 1,40,00,000 number of equity shares of face value of INR 2 each representing 5.87% of the pre-buyback fully paid up equity shares at a price of INR 1,250 per share, aggregating to INR 1,750 Cr, through the tender offer route," a Piramal statement says.

The promoter and promoter group will not participate in the buyback. Ajay Piramal, chairman, Piramal Enterprises, says: "This capital allocation strategy aims to combine investing in our core business and returning excess capital to shareholders."

The promoter group holds 43.48% stake in the company, while institutional investors including banks, mutual funds, & financial institutions collectively control 13.55% stake. Foreign holding in the NBFC stands at 25.74%, while the rest 17.23% stake is controlled by the public, corporates and others.

The tendering period of the share buyback will be open for 5 working days as per the buyback rules. The process, timelines and other requisite details will be set out in the public announcement, the company informed.

Piramal Enterprises has also reported Q1 FY24 profit at ₹509 crore, led by gain of ₹855 crore on the sale of stake in Shriram Finance. Notably, Piramal had sold 8.34% stake (3.12 crore shares) in Shriram Finance for ₹4,820 crore during the said quarter.

The company's net interest income for the April-June quarter was ₹891 crore, down 22% from ₹1,140 crore in the same period last year. Total assets under management (AUM) stood at ₹63,938 crore as of June 30, 2023, while its retail lending grew to 55% of AUM, from 34% in the year-ago period.

On the company's quarterly performance, Piramal says the company's Q1 performance is in line with its "endeavour towards building a large diversified non-banking financial company".

"In the mid to long term, we aim to have retail lending account for two-thirds of our assets, reflecting our strategic focus. In retail lending, we have achieved sustained growth in the retail sector, fulfilling the credit needs of the "Bharat" market. This business now contributes to 55% of our AUM. In wholesale lending, we are capitalising on market gaps and leveraging our strengths to build the new cash flow and asset-backed Wholesale 2.0 book across real estate and corporate mid-market lending."

Piramal Enterprises has investments and assets worth $10 billion, with a network of branches across 25 states/UTs. The company stock closed 2.08% down at ₹1,072.8 on the NSE today.