Sharekhan has given Buy recommendation for PI Industries with a target price of Rs. 3750 in its research report issued on Sep 06, 2022

Sharekhan’s research report on PI Industries

New molecule commercialisation (record 9 in FY22 and target of 7 in FY23), robust order book of $1.4 bn and focus to broaden new product offerings in non-agrochemical (electronic chemical and pharma) would mean sustained high growth in CSM business. Company has strong R&D (team of 400+) focus; it has achieved break-through for developing continuous flow chemistry for one intermediate, commissioning of new chemistry building block (MMH) and pharmaceutical lab at Udaipur (Rajasthan). New technology development key to product launch and sustained high growth. Domestic formulation business would outpace industry growth led by yet another year of above-normal monsoon, ramp-up of new launches and focus on horticulture segment through JIVARGO brand.

Outlook

We maintain a Buy on PI with a revised PT of Rs. 3,750 (rollover of PE multiple to September-24 EPS). Potential pharma acquisition would improve long-term earnings growth outlook and we are constructive on stock. At CMP, the stock trades at 35x/31x FY24E/FY25E EPS.

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