Piramal Enterprises is keeping a sharp lookout for opportunities in the general insurance sector, despite stepping back from the bid for Reliance General Insurance, according to Chairman Ajay Piramal.
In the past year, Piramal was among the contenders for Reliance General Insurance, a subsidiary of Reliance Capital tangled in bankruptcy proceedings. However, Piramal eventually withdrew from the race, clearing the path for other suitors eying the entire group, ultimately won by IndusInd Holdings.
During a discussion with analysts on Tuesday, Piramal Enterprises unveiled their ambitious plan to double their loan book by 2028. However, some market experts expressed reservations, finding the projections less promising for substantial growth. As a result, the company's shares slipped by nearly 4%, despite having surged by 36% over the preceding four months.
In an interview with TOI, Ajay Piramal defended the company's growth forecasts, asserting their conservative approach in the projections. He emphasized that the recent buyback of shares shouldn't be misconstrued as an indicator of modest growth. Piramal highlighted their strong financial position, stating, "With a net worth of Rs 31,000 crore, we stand as the third-largest NBFC based on this metric alone. Our debt-to-equity ratio is at 1.2. Even if we were to double our assets within the next four years, our existing capital should suffice. The buyback aimed to reward shareholders, and that's why the promoters chose not to participate."
Responding to queries about potentially pursuing a small finance bank license through acquisitions, Piramal underscored their strategic interest in acquisitions and the alignment of opportunities with their goals. The company plans to explore avenues within retail and wholesale lending.
While diversification is on the radar, Piramal emphasized a pronounced focus on retail lending, particularly affordable housing. "A significant portion, roughly half of our portfolio, will be directed towards affordable housing, a domain where we hold a leading position. We will also delve into loan against property (LAP), auto loans, and other unsecured lending," Piramal stated. He projected that a substantial 70% of the company's future business will be concentrated in the retail sector.
The company is also involved in a life insurance joint venture with Pramerica, a legacy from the acquisition of the bankrupt DHFL. Piramal asserted that this venture wouldn't require substantial capital injections. Speaking of their strategy in the retail sector, he described a balanced approach combining personalized interaction with a technology-driven model. Following the acquisition of DHFL, Piramal Enterprises expanded their field staff from 2,500 to 13,500 employees, extending their reach to previously overlooked tier-2 and tier-3 locations.
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