Residential and commercial buildings are seen from a show home at Lodha Altamount, a luxury residential project developed by Lodha Developers Ltd., in Mumbai, India. (Photographer: Dhiraj Singh/Bloomberg)

Q2 Results: Real Estate Lending Drives Piramal Enterprises’ Revenue

Amid concerns about non-bank lender’s exposure to developers, real estate now contributes more than two-thirds of Piramal Enterprises Ltd.’s total revenue.

Billionaire Ajay Piramal-led company’s real estate lending jumped 20 percent year-on-year to Rs 38,686 crore in the quarter ended September, according to its exchange filing. And nearly 59 percent of it is contributed by construction finance. The property lending business contributes nearly 70 percent of its total loan book.

That’s when non-bank lenders face a liquidity crunch in the aftermath of defaults by Infrastructure Leasing & Financial Services Ltd. Moreover, defaults by developers SuperTech Ltd. have added to investor concerns.

Piramal, in a conference call with analysts, said the company has sufficient liquidity even in the current volatile environment. “We are consistently improving our performance across key metrics, both on asset and borrowings.”

Overall, its financial services business loan book grew 59 percent to Rs 52,793 crore as on Sept. 30, according to the filing. Gross non-performing assets stood at 0.5 percent based on 90-day period and provisioning was 1.74 percent.

The company’s profit rose 25 percent year-on-year to Rs 480 crore in the July-September quarter. Revenue of the consolidated entity—that comprises financial services, pharma and healthcare analytics verticals—rose 24 percent on a yearly basis to Rs 3,144 crore.

Highlights from the conference call

Ajay Piramal, chairman, Piramal Group

  • Will be able to recover money in case of developer default.
  • Have well-diversified funding channel.

Khushru Jijina, managing director, Piramal Capital & Housing Finance

  • 47 percent of borrowings came from private and public banks.
  • Commercial papers outstanding is Rs 5,900 crore.
  • Have been passing on rising interest costs to customers.
  • After reverse merger, the company will be able to raise external commercial borrowings of $750 million per annum.
  • Aim to raise $250 million via external commercial borrowings by this quarter-end.