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Credit Suisse initiates coverage with outperform rating on PI Industries and set a target price of Rs 1,150 per share, implying 19 percent potential upside from Wednesday's closing price.
The research house said the agri-sciences company is strongly positioned in custom synthesis and manufacturing (CSM) segment and the orderbook in the segment provides visibility.
It has a less than 5 percent market share of global industry in CSM, hence, it is offering ample opportunity to grow for the company, it added.
Focus on speciality products in domestic business is a key differentiator, said Credit Suisse which expects revenue of CSM/Domestic to grow at a CAGR of 20 percent/14 percent over FY18-20.
The research house also expects 18 percent EPS CAGR over FY18-20, with better growth for CSM in second half of FY18 itself. EBITDA margins should sustain in narrow range, it believes.
PI Industries' second quarter profit declined 21 percent year-on-year to Rs 80 crore, primarily impacted by one-time tax adjustment.
Revenue grew by 3 percent to Rs 561 crore during the quarter due to softness in export shipments following suppressed global demand. Domestic sales in Q2FY18 increased 13 percent supported by post GST demand and launch of new products.
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