Sharekhan has given Buy recommendation for PI Industries with a target price of Rs. 3300 in its research report issued on May 18, 2022
Sharekhan’s research report on PI Industries
Revenue/OPM of Rs. 1,395 crore/22%, up 16.5%/287 bps y-o-y met expectations but PAT of Rs. 204 crore (up 14% y-o-y) missed estimates on lower other income and a higher tax rate. CSM/domestic revenues grew by 11%/47% y-o-y to Rs. 1,114 crore/Rs. 281 crore, led by strong volume growth (9.5% y-o-y) and partial price hikes (of 7% y-o-y). Margin benefited from price hike, operating leverage and better product mix. Management guided for an 18-20% y-o-y revenue growth for FY23 and sees scope for margin improvement with ramp-up of new products recently commercialised, operating leverage and price hike for certain products. PI is actively evaluating options in pharma space for acquisition in CDMO/API side.
Outlook
We maintain a Buy on PI Industries with a revised PT of Rs. 3,300. A potential acquisition in the pharma space would improve long-term earnings growth outlook and makes us constructive on the stock. At CMP, the stock trades at 36.9x/29.6x FY23E/FY24E EPS.