Accumulate PI Industries; target of Rs 877: Dolat Capital

Dolat Capital's research report on PI Industries

The domestic agri-inputs business grew by 23% to ` 3.1bn while the CSM indicative revenues also grew by 23% to ` 3.7bn (after adjusting for Ind AS 115, though not strictly comparable). The blended indicative revenue growth translates into 23% as well to ` 6.8bn. Owing to Ind AS 115, PI adjusted revenues of ` 740mn, bypassed income statement and recorded directly in the balance sheet with net earnings of ` 215mn. The gross margins after adjusting for Ind AS is higher while EBITDA margins are lower compared to last year owing to higher other expenses during the quarter.

Outlook

We maintain our estimates of 17% revenue CAGR and 18% earnings CAGR over FY18-20E EPS. The stock is currently available at 25x and 21x FY19E and FY20E EPS. PI continues to be our preferred pick, we re-iterate our Accumulate rating on the stock with a target price of ` 877(24x FY20E EPS).