PI Industries' Target Price Slashed By Jefferies After Customer Lowers Key Product's Revenue Guidance

Global agrochemicals producer PI Industries Ltd. received a target price cut from Jefferies after one of its biggest Tokyo-based customers cut its revenue guidance for Pyroxasulfone sales.

Kumiai Chemical Industry lowered its agchem revenue growth guidance for November 2024 to October 2025 period, citing a 7% year-on-year decline in pyroxasulfone sales, Jefferies said in a note. This is on the back of elevated inventory levels, the brokerage said.

The domestic firm revised guidance for fiscal 2025 factors in the lower growth of its customer Kumiai. "Raw material prices for pyroxasulfone have softened and Pi's margins will remain intact if they pass on softer raw material prices to the innovator."

Jefferies maintained its 'buy' rating, but cut the target price to Rs 4,865 per share, from Rs 5,100 apiece earlier, implying an upside of 22% from the previous close.

However, the fiscal 2026 growth should remain healthy on the back of traction in new products and inventory normalisation in pyroxasulfone, Jefferies said. New products should "cushion" the impact of lower sales and guidance cut by the Japanese firm.

Jefferies lowered the company's revenue and EPS estimates by 3-5% for fiscal 2026-27 due to weaker pyroxasulfone sales. "Margins continue to sustain at upper end of the guidance range suggesting no pricing pressure on PI's portfolio."

PI Industries stock fell as much as 1.32% during the day to Rs 3,944.35 apiece on the NSE. It was trading 0.7% lower at Rs 3,968.9 apiece, compared to a 0.14% decline in the benchmark Nifty 50 as of 09:27 a.m.

It has risen 16% during the last 12 months but declined by 13% on a year-to-date basis. Total traded volume so far in the day stood at one times its 30-day average. The relative strength index was at 32.

Of the 29 analysts tracking the company, 16 have a 'buy' rating on the stock, six suggest a 'hold' and seven have a 'sell', according to Bloomberg data. The average of 12-month analysts' price target implies a potential upside of 17%.