Dolat Capital Market has given Accumulate recommendation for PI Industries with a target price of Rs. 2406 in its research report issued on Feb 03, 2021

Dolat Capital Market’s research report on PI Industries

Sales growth was ahead of our estimates, clocking 36.7% YoY growth to Rs 11.6bn (D.est: Rs 10.7bn). Gross margins expanded by 30 bps YoY to 46.9%. PI Industries’ strong operating leverage led to an EBITDA margin expansion of 180 bps YoY to 23.7%, with EBITDA growing by 47.7% YoY to Rs 2.7bn (D.est: Rs 2.5bn). PAT grew by 61.4% YoY to Rs 1.95 bn. Exports grew by 40% YoY to Rs 9.0bn owing with efficient capacity utilisation and strong demand of commercial molecules. The company commissioned 4 new molecules in the newly acquired ISAGRO’s facility. The company has built a robust pipeline of 5-6 new molecules which could likely be commercialised in FY22. The order book remained intact at USD 1.5bn. The CSM business is expected to grow at ~20% YoY. Domestic business grew by 26% YoY to Rs 2.6bn. PI Industries branded business grew by 17% YoY, while the remainder of ~Rs 189mn could be attributed to sales from ISAGRO’s domestic business. The company successfully launched a Rice herbicide – Londax Power (Bensulfuron Methyl + Pretilachlor). PI Industries’ AWKIRA (wheat herbicide) saw a strong ramp up with treatment of over 100k acres.

Outlook

We roll forward FY23E estimates and revise our target price, we are valuing PI Industries at 40x FY23E EPS with a target price of Rs 2,406/share. We have an Accumulate rating on the stock.

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