Hold P.I. Industries; target of Rs 2000: Prabhudas Lilladher

Prabhudas Lilladher's research report on P.I. Industries

PI continued its outperformance in Q1’21 with topline/EBITDA/APAT growth of 41%/51%/44% driven by solid 76% growth in domestic business. The management continued to maintain positive commentary across CSM and domestic segments driven by stable demand outlook, continuous rise in new enquiries, entry in pharma value chain and ramp up of molecules & facilities commercialization. It plans to fully deploy QIP proceeds of Rs20bn in the next 5-6 quarters and expects to earn the existing 18-20% RoE over a period of time for newer projects as well. We would keenly watch for its foray and progress into the Pharma value chain as it is likely to be the key determinant for further rerating. We have increased our topline/EBITDA/APAT estimates for FY21 by 1%/5%/29% and for FY22 by 1%/1%/19% to factor in higher income from investments till the time the amount is deployed for growth purpose.

Outlook

We roll forward to FY23 earnings, change our rating to HOLD (from Under Review) with revised target price of Rs2000 based on 30x FY23 EPS of Rs 67.

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