InvestorQ : Can you tell me about the listing of Piramal Pharma on Wednesday 19th October 2022?
Ria Jain made post

Can you tell me about the listing of Piramal Pharma on Wednesday 19th October 2022?

Dia Deshpande answered.
1 month ago

Piramal Pharma Ltd listed on the bourses on Wednesday, the 19th of October. It listed at above Rs201 but then fell to 5% lower circuit at Rs190. That is not a very encouraging signal. Piramal Pharma had been demerged from Piramal Enterprises Ltd (PEL) since they wanted to separate the pharma franchise from the NBFC business so that the sum of parts is more than the whole. The parent PEL will now hold just the NBFC business including the Dewan Housing acquisition while the entire pharma franchise comes under the new listed company. This is also likely to be useful for funding rounds in the future.

The stock was admitted to the NSE and the BSE T2T segment. Now if a stock is Trade to Trade (T2T), it means there can be no netting of positions. Any purchase of sale can only be made for delivery and no intraday trade either on the long side or short side is permitted. Also, selling in T2T stocks can only be done with delivery already in demat. BTST and STBT are not permitted in the T2T segment. Shareholders of Piramal Enterprises Ltd will get 4 share of Piramal Pharma for every 1 share of Piramal Enterprise. This will be in addition to the already existing 1 share of PEL that they will continue to hold.

This stock swap demerger plan had been approved by the National Company Law Tribunal (NCLT) on 12th August and the approval of the exchanges also came in allowing the listing of the stock on time. Now the pharma business can get independent valuations and also funding, especially from the private equity funds. The idea of this deal is to make Piramal Pharma globally competitive and it makes a lot more sense than making it a subservient business of an NBFC business. This move is likely to be value accretive for both PEL and also for Piramal Pharma.

It would be interesting to note that Piramal Pharma itself is an amalgam of 3 distinct business. Let us look at there is a major local fund sell-off doing the rounds in the market. The first unit, Piramal Pharma, in itself is would be a combination of the traditional pharma as well as high-end molecules and healthcare franchise. The pharma franchise of the group would also include India Consumer Healthcare business of PEL, focused on over-the-counter products. Pharma is also the private equity business shows a lot of relief.