#Piramalenterprises Ltd (PEL) Concall Update on demerger of Pharma business
•Shareholders of PEL will receive 4 shares of PPL (Piramal Pharma Ltd) for every 1 share held in PEL.
•The demerger is expected to unlock value for PEL shareholders.

•The demerger is subject to shareholders, creditors and regulatory approvals which should take around 10 months.
•There will be no tax implication due to the demerger.
•PPL will become one of the largest pharma companies listed on exchanges, post the demerger.

•Net Debt in pharma co is Rs. 3200 Cr and Networth is at Rs. 7,000 Cr, Net Block in Pharma business is Rs. 6,000 Cr
•Unallocated networth of Rs. 11,000 Cr will remain in PEL.
•At CMP of Rs. 2900,market is factoring a value of approx Rs940 for Pharma Bus (@ 23x FY21 EV/EBITDA

Rs. 1460 for NBFC business (at 1.8x TTM BV)
Rs. 500 for unallocated networth lying in PEL (at 1.0x)
With the recovery in real estate industry showing early signs of an upturn, asset quality concerns in the NBFC are likely to abate and performance shall improve.

Thus we see scope for valuations to expand in the NBFC business (as well as unallocated networth – part of NBFC segment) where they are undemanding.
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