PI Industries Ltd. share price target

We remain optimistic on PI; however, current valuations seem to have factored in these positives. Accordingly we recommend a NEUTRAL rating with a TP of Rs 885/sh (25x FY20E EPS). PI Industries (PI) reported disappointing results for 4QFY18 with revenues growing 3.2% YoY to Rs 6.25bn. Growth was largely driven by the domestic business (+10.4% YoY, ~30% revenue), and weakness in exports weighed on overall performance (CSM segment +0.4% YoY, ~70% revenue). EBITDA de-grew 12.3% YoY to Rs 1.34bn and EBITDA margin stood at 21.5% (-382bps YoY). The drop was largely on account of lower gross margins (-136bps YoY to 48.4%), higher employee costs (+120bps YoY) and higher operating expenses (+127bps YoY). Higher tax rates led APAT to decline by 22.0% YoY at Rs 1.05mn.

Revenue grew 3.2% YoY to INR6,251m (est. of INR6,392m) in 4QFY18. EBITDA declined 12% YoY to INR1,347m (est. of INR1,553m), with the margin contracting 390bp YoY to 21.5% (est. of 24.3%). Adj. PAT fell 22% YoY to INR1,054m (est. of INR1,156m) due to a higher tax rate (19.3% v/s -4% in 4QFY17). For FY18, revenue remained flattish at INR22,771m, EBITDA margin contracted 260bp to 21.7% and adj. PAT declined 20% to INR3,676m.

Domestic segment surprised with 10% yoy revenue growth to Rs1.9bn, led by better product mix and increasing traction in new launches. Export revenue however, stood flat yoy at Rs4.3bn, as shipment worth Rs700mn got delayed due to logistical issues. Net Revenue grew by mere 3% yoy to Rs6.34bn and was below our as well as consensus estimates. Gross margin contracted by 130bps to 48.4% and EBITDA margin contracted by 390bps to 21.5%. EBITDA declined 12% yoy to Rs1.4bn while PBT was flat at Rs 1.3bn. more molecules in FY19. In the domestic segment the company is likely to introduce 4-5 new products which will be a mix of novel molecules and co-marketing products....

management of PI Industries to get a business update about the company and also discuss on the future outlook. The management has indicated that the global agri-commodity cycle has been picking up off-late; as clients have started placing orders for which shipment has begun. On the domestic side as well, increased budgetary allocation and support (higher MSP...

Sector: Agrichemical /Small-Cap | Earnings Update 3QFY18 Background: PI Industries' is one of the leading players in the Crop protection industry. Company largely operates under two main segments a) agriculture inputs, b) custom synthesis and contract manufacturing. Company has a niche portfolio of 34 products, which includes 5 in-licensed products and 7 co-marketing products in tie up with MNCs such as Bayer, BASF & Kumiai chemicals. Company currently operates three manufacturing sites in Gujarat, having three formulation units and six multiproduct plants for manufacturing, active ingredients and intermediates. PI has a strong distribution network of 8,000 dealers / distributors; 35,000 retailers and 27 stock points....

We recommend a NEUTRAL rating with a TP of Rs 848/sh (25x Dec FY19E EPS). PI Industries (PI) reported healthy results for 3QFY18. Revenue grew by 10.2% YoY to Rs 5.37bn, the growth was largely driven by the revival of exports i.e. CSM segment (+14% YoY, ~68% revenue), while weakness in Domestic business (+3.0% YoY, ~32% of revenue) which weighed on overall performance. EBITDA grew marginally by 1.4% YoY at Rs 1.04bn, EBITDA margin stood at 19.5% (-171bps YoY). The higher tax rates led APAT de-grew 14.2% YoY at Rs 806mn.

Revenue grew 10.2% YoY to INR5,377m (est. of INR6,004m) in 3QFY18. EBITDA margin shrunk 170bp YoY to 19.5% (est. of 22.0%), led by an increase of 212bp YoY in other expenses and 95bp in raw material cost. Agri revenue was impacted by unusual rains in states like Chhattisgarh, Telengana and Karnataka, and also by GST-related hiccups. CSM business was hurt by supply disruption from China and higher raw material prices. EBITDA rose 1.4% YoY to INR1,048m (est. of INR1,322m), primarily due to higher raw material cost and an adverse product mix in the agri segment. Consequently, adj. PAT fell 14.2% YoY to INR806m (est. of INR97m) from INR939m in 3QFY17.

In Q2FY18, domestic sales grew by 13% supported by post-GST restocking and launch of new products. However, the overall revenue growth was subdued at 3% primarily due to softness in export shipments (down 5% YoY) following suppressed global demand.

Maintain BUY with a TP of Rs 830/sh (25x FY19E EPS). PI Industries (PI) reported disappointing numbers in 2QFY18. Revenue grew marginally by 3.1% YoY to Rs 5.6bn. Weakness in global Custom Synthesis and Manufacturing (CSM) impacted exports (-4.0% YoY, 54% of revenue). Domestic business grew (+13.0% YoY, 46% of revenue), and was supported by post-GST demand and launch of new products. EBITDA de-grew 4.5% YoY at Rs 1.2bn, largely driven by an increase in raw material and employee costs.

contraction in the gross margin to 48.1% and a 160bp rise in employee expense to 10.8% of net sales. EBITDA declined 5% YoY to INR1,222m (est. of INR1,091m). Consequently, adj. PAT declined 21% to INR803m (est. INR759m) from INR1,014m in 2QFY17. The decline in revenue is partly attributable to the change in accounting standards; excise in 2QFY17 was reported as an expense item above EBITDA; however, it is net off from gross...