Buy PI Industries, says PN Vijay

Buy PI Industries with a target of about Rs 700, says PN Vijay, Portfolio Manager.

Vijay told CNBC-TV18, "PI Industries is quite an old company. It incorporated in 1947 and it is in manufacturing of agrichemicals and pesticides. About 50 percent of their business is domestic. They get licenses from multinationals and based on those licenses they manufacture products for the domestic market."
He further added, "They have a very strong contract research and manufacturing services (CRAMS) business with the leading multinational companies and that accounts for about 50 percent of the business. There is good traction in both sides of the business. On the CRAM side they have export orders of more than USD 300 million and on the domestic side they are among the top five brands in almost every portion of pesticide and chemicals."
"Its last quarter was good, sales were up about 21 percent and net profits were also up by about 25 percent with net profit of about Rs 24 crore, the EBITDA margins are stable at 15 percent. "
"The outlook going forward for the company is very good because it is a research driven special company and very focused. I expect a compound annual growth rate (CAGR) of about 30 percent in its profits in next five years. The only risk to this business is the monsoon because agro inputs are susceptible to vagaries of the weather. Last year we didn’t have a good monsoon but they still did well. The stock is quoting around Rs 550-560 and I recommend a buy on the stock with a target of about Rs 700." Disclosure: No personal holding but the stock may have been recommended to clients.