PEL - Fundamental Analysis: Financial Health & Valuation

Last Updated Time : 19 Sept 25, 2:16 pm

Fundamental Rating: 3.2

📊 Core Financials Analysis

Profitability

ROE: 2.31% and ROCE: 4.90% — weak return metrics, indicating inefficient capital deployment.

EPS: ₹19.4 — modest earnings, not supportive of the current valuation.

PAT Qtr: ₹162 Cr vs -₹23.3 Cr — a turnaround, but still volatile with a -28.8% variation.

Balance Sheet & Cash Flow

Debt-to-equity: 0.38 — moderate leverage, manageable but worth monitoring.

Dividend Yield: 0.93% — decent, but not compelling for income-focused investors.

Free cash flow generation remains a concern, as noted in recent fundamental analysis.

📉 Valuation Indicators

Metric Value Interpretation

P/E Ratio 64.4 Extremely overvalued vs industry PE of 24.0

P/B Ratio ~1.21 Reasonable, but not compelling given low ROE

PEG Ratio -3.37 Negative PEG suggests unreliable growth expectations

Intrinsic Value ₹950–₹1,050 (est.) Current price ~10–20% above fair value

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🧠 Business Model & Competitive Edge

Company Profile: Piramal Enterprises Ltd (PEL) operates in financial services and pharmaceuticals, with a focus on retail lending and structured credit.

Strengths

Diversified business model with legacy pharma assets.

Strategic shift toward retail lending and NBFC operations.

Challenges

Earnings volatility and weak return metrics.

High valuation not backed by consistent profitability.

Analysts classify PEL as an “economical performer” with limited margin strength

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📈 Technical & Sentiment Overview

RSI: 60.1 — mildly bullish, nearing overbought zone.

MACD: -7.73 — bearish crossover, short-term caution.

DMA 50 & 200: Price above both — trend recovery underway.

Volume: Below weekly average — waning interest.

FII/DII Holding: Mixed sentiment — FII reduction, DII increase.

💡 Entry Zone & Long-Term Guidance

Suggested Entry Range: ₹1,050–₹1,100 — closer to intrinsic value and technical support.

Holding Strategy

Suitable only for high-risk investors betting on turnaround and NBFC growth.

Monitor quarterly earnings, asset quality, and lending book expansion.

Price targets for FY27 range from ₹1,169 to ₹1,451 based on projected earnings

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PEL is a complex story — part turnaround, part value trap. If you're comfortable with volatility and believe in its strategic pivot, it may be worth a small allocation. Want to compare it with Bajaj Finance or Cholamandalam next?

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