Sharekhan's research report on PI Industries
Q2 results were strong with a 44% y-o-y growth in PAT to Rs. 481 crore (10% beat) led by robust growth in CSM, margin expansion of 165 bps (despite one-offs and pharma overheads), lower tax rate. CSM revenue (Agri-chem exports) growth of 22% y-o-y was robust, led by higher volumes, but domestic revenues declined 2% y-o-y due to delayed/erratic monsoon. Apart from agrochem molecules, the growth was also supported by electronics and specialty chemicals. Healthy FY24 revenue guidance (ex-pharma) of 18-20%, which would be led by volume growth and expects margin improvement. Post integration, pharma business margin expected to 20-22%.
Outlook
We maintain our Buy rating on PI Industries with a unchanged PT of Rs. 4,500. Pharma foray to diversify earnings stream and drive meaningful medium to long-term earnings growth; surplus cash of Rs. 2,891 crore to help pursue organic/inorganic growth opportunities. The stock trades at 26x its FY2026E EPS.
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