June 29, 2020

Piramal Enterprises shares fall 2.7% post stake sale to Carlyle

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Piramal Enterprises share price fell over 2% in Monday’s early trade after the company said US-based global investment firm Carlyle Group Inc will buy 20% stake in its subsidiary- Piramal Pharma for around $490 million (over Rs 3,700 crore).

The deal, being one of the largest private equity deals in the Indian pharmaceutical sector, is likely to be closed in 2020.

Following the update, the share price of Piramal Enterprises fell 2.7% intraday to the low of Rs 1,303 against the last closing price of Rs 1,342 on BSE. Earlier, the stock opened higher at Rs 1,357 and also touched an intraday high of Rs 1,363.

Piramal Enterprises share price trades higher than 5, 20, 50 and 100-day but lower than 200-day moving averages. The stock has fallen 0.99% in the last 2 days.

Piramal Enterprises’ stock has fallen 14% year to date but has risen 8% in one week and 39% in one month. Market capitalisation of the firm stood at Rs 29,534.25 crore as of today’s early session.

The transaction values Piramal’s pharma business at an enterprise value (EV) of US$2,775 million, with an upside component of up to US$360 million depending on the company’s FY21 performance.

The final amount of equity investment will depend on the net debt, exchange rate and performance against the pre-agreed conditions at the time of closing of the deal, expected to close in 2020, said Ajay Piramal, Chairman Piramal Group.

He added the funds from this deal would further strengthen the balance sheet of Piramal Enterprises and will provide a war chest for the next phase of growth strategy.

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