PI Industries Ltd. share price target

PAT grew 9% YoY to INR2,834m. CSM business delivered robust growth of 40% YoY, backed by higher demand due to an improvement in global sentiment. Domestic business performance was notable in that it grew by 10% YoY, despite facing headwinds in the form of erratic rainfall in key states and poor price realization for key crops, which impacted demand and led to higher inventory levels. We expect it to meet its FY19 guidance of ~20% revenue growth on the back of the improved global scenario and strong support from its newly launched products. Factoring in the strong beat on our 3QFY19 estimates, we raise our FY19 earnings estimate by 8% while keeping FY20/21 estimates unchanged. We expect revenue/PAT CAGR of 19%/17% over FY18-21. We value the stock at 24x FY21E EPS (in-line with its five-year average trading multiple), which is justified as the company has shown strong signs of returning to its robust growth cycle post three muted years.

We project revenue/PAT to grow at 20%/19% CAGR over FY18-20E owing to continued traction in commercialisation of molecules, scale-up of exports, healthy R&D; pipeline, additional capacity with the commissioning of new plants and robust order book position Hence, we continue to maintain our positive stance on the stock and recommend...

We remain positive on PI and maintain BUY with a TP of Rs 956/sh (25x Sept'20EPS). PI Industries (PI) 2QFY19 Sales/EBITDA was ahead of our estimates by 14.0/5.7%, due to higher than expected growth in both segments (domestic+CSM). PAT came in line due to a higher tax rate of 23.1%.

P I Industries Ltd Q2FY19 results Comment Revenue grew by 19.39% to Rs. 723.0 Cr in Q2FY19 when compared to the previous quarter. Also, it grew by 28.85% when compared with Q2FY18.

Revenue grew 19% YoY to INR13,286m. For 2HFY19, we expect revenue growth of 15% YoY, with margin expansion of 240bp YoY. PIs domestic business delivered robust growth of 24% YoY, leveraging on its established brands and new launches over the last 2-3 years. CSM business, too, grew by 32% YoY due to improved shipments in the export markets. PI commercialized two new products each in the domestic and exports markets with positive response. Growth hereon is expected to be driven by enhanced visibility of scale-up in exports and healthy R&D; pipeline being translated into commercialization. Management maintained its guidance of 18-20% growth on the back of an improved global scenario and a strong pipeline of products in both segments. Further, margins are guided to improve via a better product mix in the domestic market and backward integration initiatives. We expect robust growth in 2HFY19 as the global market shows better response in terms of product off-takes.

Reported revenues were in line with our estimates. However, after adjusting for Ind AS, revenues were ahead of our estimates. On an indicative like to like comparison on a YoY basis the performance of the company has been good in terms of topline and gross margins...

We remain positive on PI and Maintain BUY with a TP of Rs 900/sh (25x Jun'20EPS). PI Industries (PI) 1QFY19 Sales/EBITDA/PAT are not comparable on a YoY/QoQ basis due to change in the accounting standards to modified retrospective approach. The numbers hereon till 4QFY19 will not be comparable on a YoY basis. Though the gross margins were under pressure due to supply constraints and Chinas situation, PI has been trying to de-risk its procurement by moving away from the Chinese sources. We expect margins to normalize going forward. PI Industries is currently operating its plants at a ~95% capacity utilization, the company has thus planned a capex of Rs 2.5 bn for FY19-21E.

Focusing on leveraging existing collaborations with the innovator companies in both the businesses domestic agri-inputs and CSM exports. In domestic agri-inputs by entering into exclusive marketing rights of novel molecules in India with the innovators and in the CSM exports by deepening R&D; capabilities, consequently resulting in commercialization of new molecules. To drive future growth company...