Piramal Enterprises profitability boosted on operational efficiency

Piramal Enterprises (PEL) recently declared its Q2FY16 results. The company's revenue increased by 4.79 per cent to Rs 1544 crore in Q2FY16 as compared to the previous quarter. Its total expenditure decreased by 8.95 per cent to Rs 1068 crore in Q2FY16 on quarterly basis. PEL's total expenditure decreased predominantly due to a 26.21 per cent reduction in raw material prices, 4.11 per cent reduction in employee cost and 6.98 per cent reduction in other expenses during the quarter.

PEL's EBITDA was boosted by 58.42 per cent to Rs 476 crore in Q2FY16 as compared to previous quarter because company's operational efficiency during the quarter. The company's EBITDA margin expanded considerably by 1043 basis points to 30.82 per cent in Q2FY16 on quarterly basis. Its PBT increased by 27.59 per cent to Rs 225.47 crore in Q2FY16 on quarterly basis though its interest expense increased by 26.54 per cent to Rs 214.87 crore and other income reduced by 58.03 per cent to Rs 50.92 crore during the quarter. PEL's net profit increased by 21.29 per cent to Rs 245.91 crore in Q2FY16 as compared to previous quarter. The company's net profit margin expanded by 217 basis points to 15.93 per cent in Q2FY16 on quarterly basis.

Considering segmental revenue front, PEL earned 54.43 per cent from pharmaceutical segment, 27.78 per cent from financial services segment and remaining information management segment during September 2015 quarter. Further, the company's pharmaceutical segment categorised into Pharmaceutical Solutions, Critical Care and Consumer Products.

Pharmaceutical Solutions

PEL's Pharmaceutical Solutions business grew by 5.4 per cent to Rs 543 Crores in Q2FY16 on yearly basis. The company integrated Coldstream facility and commenced investing in its capability & capacity expansion to take benefit from rapidly growing outsourcing business in Sterile injectables.

Critical Care

PEL's Critical Care business grew by 18.6 per cent to Rs 208 crore in Q2FY16 on yearly basis primarily on account of increasing access to new markets, growth in our market share across geographies and positive impact of INR depreciation. The company became number one player in Isoflurane and increased sales volume of Sevoflurane in the US market. Its market share in UK increased to 15 per cent. PEL also entered the markets of Malaysia and Iraq during the quarter. In H1FY16, revenue grew 8.1 per cent to Rs 399 crore on yearly basis.

Consumer Products

PEL's Consumer Products business were broadly in line at Rs 86 crore in Q2 FY16 and Rs 178 crore in H1 FY16. The company's high growth in most of top brands was largely offset by temporarily lower growth in i-pill and Saridon.

PEL's shareholding pattern indicates that FII holdings expanded by 374 basis points to 27.54 per cent while DII holdings contracted by 370 basis points to 3.37 per cent during Q2FY16. The share price of the company increased 3.48 per cent on bourses in early trades and is trading at Rs 1003 on intraday basis.

PEL is one of India’s large diversified companies, with a presence in Healthcare, Healthcare Information Management and Financial Services. In healthcare, the company is one of the leading players globally in CRAMS (custom research and manufacturing services) as well as in the critical care segment of inhalation and injectable anaesthetics.