Recent Price Movement and Market Context
On the trading day, Piramal Pharma’s stock price touched Rs.169.75, representing the lowest level in the past year. This decline comes after seven consecutive sessions of losses, during which the stock has recorded a cumulative return of -8.21%. The day’s performance also showed the stock underperforming its sector by 0.5%, indicating relative weakness compared to its pharmaceutical and biotechnology peers.
Technical indicators reveal that Piramal Pharma is trading below all key moving averages, including the 5-day, 20-day, 50-day, 100-day, and 200-day averages. This positioning suggests sustained downward momentum and a lack of short- to long-term price support levels.
In contrast, the broader market environment has been relatively stable. The Sensex opened flat and traded marginally higher by 0.02%, standing at 84,410.95 points. The benchmark index remains close to its 52-week high of 86,159.02, just 2.07% away, supported by bullish moving averages where the 50-day average is above the 200-day average. Mid-cap stocks have shown modest gains, with the BSE Mid Cap index rising by 0.05% on the day.
Financial Performance Highlights
Piramal Pharma’s recent quarterly results have reflected challenges in profitability and sales. The company reported a Profit Before Tax excluding other income (PBT LESS OI) of Rs. -111.78 crores, which is a decline of 340.0% compared to the average of the previous four quarters. Similarly, the Profit After Tax (PAT) for the quarter stood at Rs. -99.22 crores, showing a fall of 613.2% relative to the prior four-quarter average.
Net sales for the quarter were Rs. 2,043.72 crores, down by 10.5% against the previous four-quarter average. These figures indicate a contraction in revenue alongside significant losses at the profit level.
Over the past year, the stock has generated a return of -34.08%, contrasting with the Sensex’s positive return of 3.54% during the same period. The stock has also underperformed the BSE500 index over the last three years, one year, and three months, highlighting a prolonged period of relative underperformance.
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Debt and Profitability Metrics
One of the key concerns for Piramal Pharma is its debt servicing capacity. The company’s Debt to EBITDA ratio stands at 3.83 times, indicating a relatively high level of leverage compared to earnings before interest, taxes, depreciation, and amortisation. This ratio suggests that the company may face challenges in managing its debt obligations efficiently.
Profitability metrics also reflect subdued performance. The average Return on Equity (ROE) is reported at 0.32%, signalling limited profitability generated per unit of shareholders’ funds. This low ROE points to constrained returns for equity investors over the measured period.
Despite these challenges, the company’s operating profit has shown a compound annual growth rate of 23.29% over the long term, indicating some underlying strength in core operations. Additionally, the Return on Capital Employed (ROCE) is recorded at 2.7%, with an Enterprise Value to Capital Employed ratio of 2.2, suggesting a valuation that is fair relative to the capital invested in the business.
Valuation and Market Position
Piramal Pharma’s stock is trading at a discount compared to the average historical valuations of its peers in the pharmaceuticals and biotechnology sector. This discount may reflect the market’s assessment of the company’s recent financial performance and leverage profile.
Institutional investors hold a significant stake in the company, with 45.17% of shares owned by such entities. These investors typically possess greater resources and analytical capabilities to evaluate company fundamentals, which may influence the stock’s trading dynamics.
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Long-Term Growth and Profit Trends
While recent quarters have shown declines in profitability and sales, the company’s longer-term growth in operating profit at an annual rate of 23.29% suggests some resilience in its business model. However, the net profit over the past year has fallen by 158.7%, underscoring the volatility in earnings.
The stock’s 52-week high price was Rs.273.20, which contrasts sharply with the current 52-week low of Rs.169.75. This wide range highlights the significant price movement and market sentiment shifts experienced by Piramal Pharma over the last year.
Overall, the stock’s performance over the past year and longer periods has lagged behind broader market indices and sector benchmarks, reflecting a combination of financial pressures and market conditions.
Summary of Key Metrics
The following points summarise the critical financial and market data for Piramal Pharma:
- New 52-week low price: Rs.169.75
- Seven consecutive days of price decline, with cumulative returns of -8.21%
- Debt to EBITDA ratio: 3.83 times
- Average Return on Equity: 0.32%
- Operating profit growth rate (annual): 23.29%
- Return on Capital Employed: 2.7%
- Enterprise Value to Capital Employed: 2.2
- Institutional shareholding: 45.17%
- One-year stock return: -34.08% versus Sensex return of 3.54%
The stock’s current position below all major moving averages and its recent financial results provide a comprehensive picture of the challenges faced by Piramal Pharma in the recent period.
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