Piramal Finance Analysis – Updated by Motilal Oswal

Piramal Finance is getting a boost from Motilal Oswal, who has raised their target price to ₹1,790. This upgrade shows confidence in the company’s changes. Piramal Finance is successfully shifting from lending to a lot of big companies to lending primarily to people buying homes, especially in smaller cities. This is a smart move because it’s much more stable and profitable.

Key Points

• Piramal Finance’s target price raised to ₹1,790 by Motilal Oswal.
• Focusing on lending to people in smaller cities ( “Middle India”).
• Over 90% of the company’s loans are now to individual homebuyers.
• Lower operating costs are driving increased profits for the company.
• Retail lending is growing fast – 35% annually, with a strong outlook.
• Motilal Oswal expects significant improvements in profitability and growth.

The biggest change is that Piramal Finance is now focused on lending to people buying homes, particularly in areas with less competition. This is a much safer strategy than lending mainly to big businesses. Motilal Oswal’s upgrade reflects this positive change and their belief in the company’s future growth.

Five years ago, most of Piramal Finance’s lending went to large companies. Now, around 83% of their loans are going to people buying homes in towns and cities that aren’t huge. This shows they’ve successfully rebuilt their business and are targeting a growing market.

Piramal Finance is also cutting back on lending to big companies, aiming to have less than 5% of their loans go to businesses by 2026. This helps them keep their costs down and makes their lending more predictable.

Motilal Oswal thinks that Piramal Finance will continue to grow and become more profitable because of several factors. They expect the company to control its costs, make more money from lending fees, and keep lending to people who are likely to pay back their loans.

The company’s profits are already improving. They started making money from their lending in July 2023, and they’re aiming for even bigger profits in the future. They plan to grow their lending to ₹1 trillion by 2026, ₹1.5 trillion by 2028, and ₹2 trillion by 2030.

Piramal Finance is also carefully managing its money and investments. They won’t need to raise more money from investors until at least the middle of 2027. They also plan to sell off parts of their investments in other companies to get more cash.

Ultimately, Piramal Finance is becoming a strong, growing lender that is well-positioned for success in the Indian market.