Ajay Piramal, chairman of Piramal Group, speaks during an interview in Mumbai. (Photographer: Dhiraj Singh/Bloomberg)

Q4 Results: Piramal Enterprises Profit Soars On One-Time Tax Boost

Indian billionaire Ajay Piramal-promoted, Piramal Enterprises Ltd.’s profit soared in the quarter ended March as it recognised deferred tax assets arising from the merger of its wholly owned subsidiaries.

Profit rose 13 times to Rs 3,940 crore as compared with the same quarter last year, due to a tax write-back of Rs 3,569 crore, the company said in its filing with the stock exchanges. Net sales, contributed by its three verticals — financial services, pharma and healthcare analytics — increased 21 percent to Rs 2,991 crore on a yearly basis.

Earnings before interest, tax, depreciation and amortisation rose 33.7 percent to Rs 1380.6 crore while the operating margin expanded to 46.1 percent to 41.2 percent.

Merger Of Financial Services Arms

The company also concluded the reverse merger of its financial services subsidiaries — Piramal Finance and Piramal Capital into Piramal Housing Finance — effective March 31. “It made sense for us to bring all the lending businesses under one umbrella,” Piramal told BloombergQuint in an interview. The merger would provide the company a better credit rating due to a diversified portfolio of the combined entity, which would eventually bring down its borrowing costs by 30-50 basis points. The company also expects the return on equity to go up by 2-3 percent this year, he said.

The Rs 3,569-crore deferred tax asset created by the merger would reduce the actual tax outflow over the next 6-7 years, he said.

Other Highlights

  • Financial services’ sales grew 40 percent to Rs 1395 crore.
  • Global pharma sales grew 10 percent to Rs 1330 crore.
  • Over-the-counter drugs sales in India fell 23 percent to Rs 85 crore due to residual impact of GST on the wholesale channel.
  • Healthcare Insight and Analytics’ revenue grew 3 percent to Rs 234 crore.
  • Current and deferred tax grew 83 percent to Rs 189 crore as the tax benefits available earlier to the company were exhausted, according to Piramal.
  • Net profit margin remained flat at 13 percent
  • Board recommended a dividend of Rs 25 per share of face value of Rs 2 each.

(Corrects earlier version which misstated the profit figure.)

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