Edelweiss is bullish on PI Industries has recommended buy rating on the stock with a target price of Rs 961 in its research report dated May 17, 2017.
Edelweiss' research report on PI Industries
PI Industries (PI) reported muted revenue growth of 4% YoY for Q4FY17. While domestic revenue was flat YoY at INR 2bn, CSM business reported marginal growth of 5% YoY to INR 4.3bn. However, sharp margin expansion by 680bps YoY/420bps QoQ to 25.4% (highest in the last many quarters) driven by product mix and operating leverage benefits along with tax write-back in Q4FY17 saw PAT jump 41% YoY to INR 1.4bn (ahead of our and consensus estimates).
We raise our margin estimates, but factoring in revenue guidance we trim our FY19E PAT by 4%. We maintain ‘BUY’ with revised TP of INR 961 (INR 1,000 earlier). Though lower PAT CAGR of 7% (FY17-19E) limits medium term upside, PI’s existing CSM business and foray into pharma offers huge growth opportunities in long term.
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