Piramal Enterprises Q3 profit up 29.2% to Rs321.71 crore

Mumbai: Ajay G. Piramal-controlled Piramal Enterprises Ltd’s diversification strategy seems to be paying off.

Piramal Enterprises’ consolidated net profit was up 29.2% to Rs.321.71 crore in the December quarter against Rs.249.02 crore a year ago, owing to pure revenue growth, the company said in a statement on Monday.

Net sales rose 33.4% in the quarter to Rs.1,847.71 crore from Rs.1,385.12 crore a year ago.

While healthcare, the mainstay of the company, registered 16.7% rise in the third quarter of the current financial year, the financial services vertical posted 131.3% growth.

Piramal Enterprises has presence in healthcare and healthcare information management, besides financial services.

Healthcare contributed 53% of the total sales, while financial services accounted for 26.8%.

Piramal Enterprises is trying to diversify to newer areas, including financial services, for the last three to four years.

Income from financial services was 131% higher at Rs.508 crore for the third quarter of FY2016 and 94% higher at Rs.1,305 crore for 9M FY2016.

The growth in income was primarily driven by increase in the size of the loan book.

Loan book grew by 181% to Rs.11,070 crore as on 31 December 2015 against Rs.3,933 crore as on 31 December 2014.

“Construction financing continued to grow at a rapid pace. It now constitutes 38% of the real estate loan book. Asset quality continued to remain robust with a GNPA (gross non-performing assets) ratio of just 1%. Company has provided for more than the required provision. Gross assets under management grew to Rs.8,638 crore during the quarter,” the company said.

The firm had invested in 57 projects across six cities with 23 leading developers.

“We exited more than 92% of corpus in real estate vintage funds and expecting to reach 100% in next few months. Also, during the quarter we announced to launch ‘Piramal India Resurgent Fund’ with a corpus of Rs.6,000 crore focusing on acquiring stressed loan,” said the company statement.

The figures for the December quarter are not comparable on account of various acquisitions and divestitures, the company said.

Operating profit for the third quarter of FY2016 was 96% higher at Rs.628 crore, primarily driven by strong revenue performance across most businesses during the quarter and fall in research and development expenses, the company said.

“Most importantly, in an environment of muted earnings growth across sectors over the last few years, our performance has been consistently improving in all the three segments over last five years. We are continuing to execute our long term strategy. I feel more confident about our ability to consistently deliver such results as we go forward. As an organization, we remain committed towards sustainably creating long term value for our shareholders,” said Ajay Piramal, chairman at Piramal Enterprises, in a press release.