Piramal Enterprises is buzzing in trade after Citi bets on the company post the Mumbai NCLT giving the final order in the DHFL resolution case. Citi, in its note, has opened a 90-day positive catalyst on the stock and has raised the target price to Rs 2,260.
According to Citi, the DHFL deal will benefit Piramal Enterprises in a couple of ways and all the positives will get priced in with the June quarter results.Key Benefits
- Potential net worth accretion due to low purchase price of loans.
- Decline in cost of funds as the deal is financed with 6.75 percent coupon bonds versus Piramal's 10.8 percent cost of funds in FY21.
- Improved product mix will result in share of retail housing to rise to over 40 percent from the current 12 percent.
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- Erstwhile promoters have raised the matter in the Supreme Court.
- Insurance regulator's approval is pending.