Buy PI Industries; target of Rs 3720: Motilal Oswal

Motilal Oswal's research report on PI Industries

PI’s FY21 Annual Report highlights its intention to build multiple growth engines and take PI to the next level in the global arena, with more substantive participation in the Life Sciences domain. Here are the key insights: Pace of commercialization of new molecules increased Custom Synthesis and Manufacturing (CSM) saw strong growth of 35% YoY (to INR33.2b) in FY21, driven by volume growth in existing products and the commercialization of five molecules (~90% of CSM revenues come from patented molecules). FY21 saw strong growth despite 31% growth in the previous year. The order book position for the year stood at ~USD1.5b. PI operationalized two manufacturing facilities (with capacity enhancements of ~15% in key products) and commissioned a pharma lab in Rajasthan in FY21. PI also undertook process improvements for nine projects to identify and implement cost improvement opportunities at the plant level. PI received over 40 active inquiries at different stages and initiated seven new customer relationships in FY21.

Outlook

We value the stock at 40x Sep'23 EPS to arrive at TP of INR3,720. Maintain Buy.