Sell PI Industries; target of Rs 512:Karvy

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26 Aug, 2025 12:21

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Karvy's research report on PI IndustriesRevenue growth has been weaker than expected in the CSM segment. This also shows up in weak growth in the order book from the last 4 quarters. Order book growth has been especially weak post Q4FY15. FY16E revenue estimates: CSM revenue is expected to be around Rs. 12990 Mn as against our earlier expectation of Rs. 13440 Mn. Domestic Agri business contribution is expected to be around Rs.8470 Mn as against our earlier expectation of Rs. 8811 Mn. FY17E estimates are expected to see a downward revision of Rs. 540 Mn in CSM segment and Rs. 544 Mn in Domestic Agri segment. y EBITDA Margin expansion in H1 has been attained to some extent at the expense of higher receivables. Trade Payables and Inventory have not increased at the same pace on a YoY basis. We thus see EBITDA Margin normalizing to FY15 levels by the end of the year at around 19.1% as against our earlier estimates of 19.5% and remain unchanged in FY17E from our earlier estimates of 19.6%. y RoE is expected to drop in FY16E to 22.9% from the earlier estimate of 25.0% and RoCE is expected to see a drop to 22.0% from the earlier estimates of 24.5%. FY17E estimate for RoE is expected to drop to 22.3% from earlier estimate of 23.9% and RoCE from earlier estimate of 22.6% to 20.2%.We reiterate our “SELL” recommendation on PI Industries with a target of Rs 512, for an EV/EBITDA Multiple of 15x for FY17E EBITDA. We see a possibility of further downside going forward in case of revenue growth continuing to be subdued.For all recommendations, click here Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

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