Piramal Pharma Solutions Ltd (Rs.16.65): Highly Undervalued?

In August last year, the National Company Law Tribunal approved the demerger of Piramal Enterprises' (PEL) pharma business and the simplification of the company's corporate structure. The order paved the way towards creation of two separate listed entities Piramal Enterprises Ltd (NBFC) and Piramal Pharma Ltd (PPL).

It is to be noted that the demerger plan of Piramal Enterprises was approved by the company’s board a year ago after PE biggie Carlyle Group invested about $540 million for a 20% equity stake in Piramal Pharma in 2020. 

Now, let do some simple arithmetic,

$540 million = Rs.4428 Cr.

This much amount was paid for 20% stake in Piramal Pharma Solutions Ltd (Rs.16.65) by PE biggie Carlyle Group in 2020.

Which means the approximate valuation of Piramal Pharma Ltd = Rs.22,140 Cr in 2020 or 3 - years back.

Ironically, this is against the current market cap of Rs.13,681 Cr.

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However, as mentioned above this the valuation of Piramal Pharma Ltd (Rs.116.65), around 3 - years back.

Now add Inflation to that, which means the current valuation of Piramal Pharma Ltd should be around Rs.24,000 - 25,000 Cr.

This is against the market cap of ONLY Rs.13,681 Cr.

What did you observe? What is your opinion?

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By the way, I feel Motilal Oswal Securities Ltd's valuation of Rs.210 for Piramal Pharma Ltd (Rs.116.65) was based on this price discovery mechanism.

What do you say?