Buy PI Industries; target of Rs 2450: Sharekhan

Sharekhan's research repor on PI Industries

Q2FY21 results were strong as revenues and EBITDA margin beat estimates by 12.4% and 269 bps, respectively, rising to Rs1,158 crore (up 27.6% y-o-y) and 24.2% (up 298bps y-o-y). Revenue beat was driven by strong out-performance in domestic business (33% y-o-y growth) and exports (25% y-o-y increase). Gross margin expansion and higher operating leverage led by sharp improvement in EBITDA margin. Robust order book position of $1.5 billion in CSM business and decent growth in domestic market bodes well for sustained strong revenue growth for PI Industries. Management maintained its FY2021E growth guidance of 20%. Focus on acquisition in high RoCE business of Pharma and specialty chemicals would boost yield on QIP funds and improve margin and return profile of PI Industries in the coming years.

Outlook

Hence, we maintain our Buy on PI Industries with revised PT of Rs. 2,450.

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