Buy PI Industries; target Rs 154: Nirmal Bang

Nirmal Bang's research report on PI Industries Limited (PIIL)

The Company expects growth of 25 percent in FY14 where in Jambusar plant is expected to contribute around Rs 100 cr of revenues (it contributed Rs 15 cr in Q4FY13). It has commercialized 14 products till now and expects to launch 1-2 more products in FY14. It has a pipeline of 25-27 products (average success rate is 40-45 percent). Current Order book of CSM stands at USD 305 mn. The company is under negotiation with a customer for commercialization of another product. If the deal goes through, then the company would set up second plant at Jambusar by end of FY14. Total capex spent on Jambusar is Rs 175 cr of which Rs 85-90 cr includes for common infrastructure and rest on first plant. Agri: PI industries expects strong growth of 20 percent in agri business in FY14 on back of good monsoon and launch of two new products (including one 9(3)). Management expects increase in margins on back of favorable product mix in domestic business. Full FY14 and FY15, the company expects to spend Rs 100 cr on capex. Overall the company is expected to grow at 20-25 percent with 125-150 bps improvement in margins. Valuation & Recommendation: We believe that with macro factors like low per-capita pesticides consumption in the country, increasing MSPs and increasing acceptance for the need of crop protection products make PI Industries a good long term bet while healthy order book of CSM, strong balance sheet and new product launches in Agri Input segment will drive near to medium term growth. At CMP, the stock trades at 12.1x FY14E and 8.6x FY15E. We maintain our BUY rating on the stock with price target of Rs 154 (15x on FY14E EPS)," says Nirmal Bang research report. Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

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