Sharekhan's research report on PI Industries
Revenue/OPM of Rs. 1,543 crore/22.4%, up 29%/155 bps y-o-y was significantly above our estimates led by phenomenal growth in the CSM business. PAT grew by 40% y-o-y to Rs. 262 crore (19% above estimate), aided by a lower tax rate. CSM segment’s revenues grew by 42% y-o-y to Rs. 1,142 crore supported by high volume growth of 30% y-o-y and favourable pricing and currency impact of 12% y-o-y. However, domestic revenue growth was muted at 4% due to delayed monsoons. Management guided for 20% plus revenue growth (versus 18-20% earlier) for FY23 as for CSM biz. PI sees strong demand traction and domestic growth to pick-up in Q2FY23 with ramp-up of new products. Capex guidance upped to Rs. 650 crore on strong demand traction in CSM. We have increased our FY23-24 earnings estimate to factor higher revenue growth and a lower tax rate.
We maintain a Buy on PI Industries with a revised PT of Rs. 3,550. A potential acquisition in the pharma space would improve long-term earnings growth outlook and makes us constructive on the stock. At CMP, the stock trades at 42x/34x FY23E/FY24E EPS.
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