Buy PI Industries; target of Rs 4260: Motilal Oswal

Motilal Oswal's research report on PI Industries

PI Industries (PI) reported a muted quarter as revenue declined 16% YoY due to 13%/18% YoY drop in domestic agrochem/CSM revenue. However, pharma revenue surged ~54% YoY (3% mix). Consolidated EBITDA margin expanded 60bp YoY, led by a 550bp gross margin improvement, offset by higher employee/other expenses. Higher expenses were due to strategic development and promotion expenses of new businesses.

Outlook

We expect a CAGR of 7%/6%/5% in revenue/EBITDA/adj. PAT over FY25-28. We reduce our FY27/FY28 earnings estimates by 6% each while broadly maintaining our FY26E earnings. We reiterate our BUY rating with a TP of INR4,260 (based on 36x Sep’27E EPS).