De-Merger and Its Effect on Performance: A Case Study of Piramal Enterprise Limited

This research paper presents the analysis of the demerger of Piramal Enterprises Limited into two entities, Piramal Pharma Limited and Piramal Financial Services Limited. The research paper examines the impact of demergers on the share prices of Piramal Enterprise Limited, Piramal Financial Services Limited, and Piramal Pharma Limited. On May 8, 2024, PEL completed a reverse merger with its subsidiary, Piramal Capital & Housing Finance Limited (PCHFL), and the combined entity, Piramal Finance Limited (PFL). In addition, the research paper examines the impact of this demerger on the financial metrics such as net sales, net profit, return on equity, and market capitalization. In this manner, the study highlights pre- and post-demerger fluctuations in these metrics, showcasing the demerger’s impact on the entities’ financial performance. The study also delves into the demerger process, the reason behind the demerger, and its framework in the context of relevant regulations and emphasizes the growing importance of demergers as a strategic tool for business growth.