Piramal Enterprises, a non-banking financial company (NBFC), experienced a significant drop of 8.1% in trade, with its shares falling to Rs 985.45 each. This decline was a result of the market’s reaction to the disappointing first fiscal quarter earnings reported by the financial services company. Later on the shares recovered and settled at Rs. 1,011.75 with 5.70% drop on NSE today.
During this quarter, Piramal Enterprises posted a consolidated net profit of Rs 509 crore. However, it’s important to note that this figure was mainly influenced by the stake-sale of Shriram Finance, amounting to Rs 855 crore. Without this one-time gain, the company’s bottom line would have shown a substantial loss.
Comparing it to the same period in the previous year, the net profit plummeted by a staggering 94%, dropping from Rs 8,155 crore. Nonetheless, when compared to the preceding quarter (Q4FY23) where the company faced a loss of Rs 196 crore, Piramal Enterprises managed to turn a profit.
The net profit in this quarter also included a gain of Rs 8.6 billion from the stake sale in Shriram Finance, along with a goodwill write-off of Rs 2.8 billion.
In light of these developments, Piramal Enterprises announced a stock buyback plan. The company plans to buy back 1.4 crore shares, accounting for 5.87% of its equity share capital, at Rs 1,250 per share, with a total value of Rs 1,750 crore.
This buyback decision has provided reassurance to investors about capital allocation and the long-term commitment of the promoter group to the company’s growth. Brokerage firm Emkay expressed their confidence in this move.
Following SEBI rules, 15% of the total tender offer is reserved for the small shareholder category, which includes investors holding investments of not more than Rs 2 lakh in the company as of the record date. Currently, the company’s public holding stands at 56.03%, with small shareholders owning 12.19% or 2.9 crore shares, while the promoter group holds 43.48% or 10.3 crore shares.
Therefore, out of the 1.4 crore shares subject to the buyback offer, 15% (equivalent to 21 lakh shares) would be reserved for small shareholders. As a result, the Minimum Acceptance Ratio for the General category stands at 6%, while the Acceptance Ratio for the Small shareholder category would be 7%.