Buy P.I. Industries; target of Rs 4600: Prabhudas Lilladher

Prabhudas Lilladher is bullish on P.I. Industries has recommended buy rating on the stock with a target price of Rs 4600 in its research report dated November 09, 2023.

Broker Research

November 14, 2023 / 18:19 IST

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Prabhudas Lilladher's research report on P.I. Industries

PI Industries (PI) 2QFY24 results were better than ours and consensus estimates with Revenue/EBITDA/PAT growth of 20%/28%/44% YoY (PLe 12%/15%/16% YoY) led by robust performance in the exports segment. CSM revenues were up 28% YoY to Rs16.3bn, while domestic revenues remained subdued at 2% YoY to Rs4.84bn (PLe Rs5.3bn) as focus was largely towards efficient WC management than that of volume growth. Favorable product mix resulted in gross margin expansion of 140bps YoY to 47%, while higher gross profit coupled with operating leverage resulted in EBITDA margin expansion of 160bps YoY to 26.0% (PLe25.0%). CSM order book position stood at USD1.8bn (Flat YoY sequentially). Citing robust demand momentum, PI continues to guide revenue growth of 18-20% YoY along with consistent margin improvement primarily driven by strong enquiries in CSM business and new launches in domestic segment. The twin pharma acquisition announced recently (in april’23) is also anticipated to support overall growth going forward.

Outlook

We largely maintain our EPS estimates for FY24/25E factoring in company’s robust performance in 2Q’24 and expect Revenue/PAT CAGR of 21%/23% (FY11-23, 20%/28%) over FY23-25E. Maintain ‘BUY’ with revised TP of Rs4,600 (earlier Rs4,850) based on 35xFY26E EPS.

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