New Delhi: Following the demerger of its pharmaceutical division, Piramal Enterprises (PEL) has acquired board clearance to repurchase shares worth Rs 1750 crore. This is the first such action by the diversified financial services company.
The company plans to purchase the shares for Rs 1250 each. According to the company’s regulatory statement, it plans to repurchase 14 million shares with a face value of Rs 2, or 5.87% of its paid-up share capital.
Piramal Group chairman Ajay Piramal said: “This aligns with our focus on long-term shareholder value creation. The promoter and promoter group will not participate. After the buyback, the consolidated capital adequacy ratio would be 31%, much above the Sebi-mandated 15%. We are adequately capitalised.”
PEL has fixed August 25 as the record date for the proposed buyback. The buyback price is at a 16.51% premium over Friday’s closing price of Rs 1,072.80, down 2.15%, on BSE.
The process is expected to be completed within two months, he said. As of June 30, PEL had a net worth of Rs 30,844 crore, with cash and liquid investments of Rs 9,613 crore (12% of total assets) and a gross debt of Rs 47,077 crore. Its debt-to-equity ratio stood at 1.53:1. As of July 21, PEL’s promoter and promoter group shareholding stood at 43.48%, domestic institutions at 13.55%, foreign holding at 25.74% and remaining with the public and others.
Separately, the board of Piramal Pharma approved a rights offering for Rs 1,050 crore at Rs 81 per share. The case’s subscription period begins on August 8 and ends on August 16, respectively. The issue size has been set at 129.6 million, and August 2 is the record date for determining qualified shareholders to participate in the offer-for-sale (OFS). Piramal Pharma’s net debt-to-equity ratio as of March 31 was 0.71:1.
On Friday, PEL posted a consolidated net profit of Rs 509 crore, a 94% fall from Rs 8,155 crore recorded during the same quarter of last fiscal. The NBFC posted a net loss of Rs 196 crore in the quarter that ended in March.
On the sale of Shriram Finance, the net profit for Q1 was led by a gain of Rs 855 crore. It said consolidated total income fell 9% to Rs 1,935 crore from Rs 2,121 crore in the year-ago period.
“Our Q1 performance aligns with our endeavour towards building a large diversified NBFC. In the mid-to-long term, we aim to have a retail lending account for two-thirds of our assets, reflecting our strategic focus,” Piramal added.
