PI Industries’ share price gained more than 1% on Friday adding to its gains of about 15%, which the stock has seen since October lows. While concerns around most chemical manufacturers remain elevated in relation to inventory, demand slowdown in developed countries, increase in Chinese Exports, PI Industries with patented molecules and niche product range remain better placed compared to peers analysts feel. Q2 performance witnessed as PI Industries’ financial performance remained strong amid favorable demand momentum while many peers saw pressure on performance.
PI Industries reported a 20% increase in revenue with Income before interest tax depreciation and amortization (Ebitda) growing 28% and net profit growth of 44% year on year. The same was driven by a 22% growth in Agro-chemical Exports driven by a volume growth of 21%. Pharma contributed Export earnings of Rs. 719 million ie 6% of the total increase in income from Exports.
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PI continued to drive revenue growth of 18-20% YoY along with consistent margin improvement primarily driven by strong inquiries in CSM (Custom Synthesis Manufacturing) business and new launches in domestic segment. Swarnendu Bhushan Co-Head of Research, Prabhudas Lilladher Pvt Ltd. said Q2 activity recalled strong and outlook remains positive. The twin farm acquisition announced recently (in April’23) is also expected to support overall growth going forward said Bhushan. Prabhudas target price for PI Industries stands at ₹4600 indicating an improvement of up to 22% above current levels
Analysts at Axis Securities said they are marginally revising their estimates to take into account improved product mix and their impact on margins. The stock has seen a correction recently, which presents additional potential. The target price of ₹4090 by Axis Securities indicates an upside of more than 8% from current stock price levels.
The correction in share prices was driven by some concerns about entering competition in one molecule.
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A major investor concern about PI was the effect of generics entering pyroxasulfone herbicide. Analysts at Jefferies India Pvt Ltd in a recent report said “our analysis of the Australian market, which has seen patent expiry in Calendar Year 2021, indicates limited traction of generics with Kumiai sales accelerating post patent expiry”. With no geography poised to see patent expiration ahead. Calendar year 2025, PI should deliver strong growth over the estimated FY24-25. Their target price of ₹4290 indicates an improvement of more than 15% from current stock price of PI Industries. They projected 20% revenue net profit CAGR (compound annual growth rate) during FY23-26
Disclaimer: The opinions and recommendations made above are those of individual analysts or trading companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions
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Updated: 24 Nov 2023, 12:40 IST
(tagsTo Translate)PI Industries