Buy PI Industries; target of Rs 2740: Sharekhan
Sharekhan is bullish on PI Industries has recommended buy rating on the stock with a target price of Rs 2740 in its research report dated February 03, 2021.
February 09, 2021 / 10:49 PM IST
Sharekhan's research report on PI Industries
Q3FY2021 results were strong with revenues/operating profit of Rs. 1,162 crore/Rs. 276 crore, up by 36.7%/47.7% y-o-y and 9%/14.8% above our estimate of Rs. 1,066 crore/Rs. 240 crore. Revenue beat was driven by a strong outperformance of the CSM business (40.1% y-o-y growth) and domestic business (26.2% y-o-y growth). Strong gross margins and efficient capacity utilisation drove up OPM by 176 bps y-o-y to 23.7%. The management expects strong growth momentum to sustain and guided for revenue growth of 20% each in FY2021 and FY2022. Outlook for CSM business is robust with the likely start of a new MPP in Q4FY21 and launch of 5-6 new molecules in FY22 while strong demand for branded products to drive growth for domestic business.
Likely successful deployment of QIP money of Rs. 2,000 crore in high-margin, high-return pharma and specialty chemicals could act as a key re-rating catalyst. Hence, we maintain a Buy on PI Industries with an unchanged PT of Rs. 2,740.
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