PI Industries good buy, target Rs 825: Ambit Capital

Gaurav Mehta, VP-Institutional Equities at Ambit Capital told CNBC-TV18, "PI Industries is buy at these levels because looking at the fundamental delivery in terms of results, the stock has continued to outbeat expectations. Expectations themselves have been lofty and yet the company has continued to out beat expectations especially the custom synthesis manufacturing (CSM) business which is now 60 percent of revenues, closer to 70 percent of the bottomline that continues to grow significantly better than expectations. The domestic agri business in itself grows at something like 17-18 percent."

"We think in terms of earnings, the company looks very likely to grow at something like 30 percent plus over the foreseeable future, over the next two-three years. So, in that context the stock which has return on equity (RoEs) in excess of 30 percent and which trades at something like 20x FY17 earnings obviously optically doesn’t look like it is too cheap but given the earnings trajectory, given the return ratio profile and given the underlying drivers of the business we think that it is a good buy even at these levels. Our price target on the stock is somewhere around Rs 825," he said.