PI Industries Ltd., a pesticides and agrochemicals producer, has received share price target cuts from multinational brokerage firms Jefferies and Citi after weak earnings. The company reported all-round weakness in revenues and negative operating leverage in the third quarter and expects sequential improvement henceforth.
Besides the fall in revenue, CSM (Custom Synthesis and Manufacturing) exports declined 32%, volumes declined 29% while price fell too. Domestic revenues were 12% below estimates, amid lower farmer demand and erratic rainfall that impacted key crops. Pharma revenues declined 6%.
PI Industries Q3 Results (Consolidated, YoY)
- Revenue down 28% at Rs 1,376 crore vs Rs 1,901 crore
- Ebitda down 41% at Rs 302 crore vs Rs 512 crore
- Margin at 22% Vs 26.9%
- Net Profit down 16.5% at Rs 311 crore vs Rs 373 crore
Citi has issued a double downgrade on the stock after Q3 performance was below expectations, and the outlook for FY26 appeared weak due to subdued guidance from Kumiai, a joint venture with Japan's Kumiai Chemical Industry Co., along with price cuts in Pyroxasulfone. Kumiai has guided for a decline in sales of Axeev (pyroxasulfone) for the period from November 2025 to October 2026, further reducing visibility on future growth.
Analysts at Jefferies said visibility on growth recovery in PI's CSM business remains is "clouded". A weak base in FY26 and a gradual ramp-up in new molecules are expected to support recovery only in FY27.
As a result, the firm has cut its FY26 and FY27 revenue estimates by 11% and 14%, respectively, which also leads to a reduction in FY26/27 EPS estimates by 11% and 22%. Despite these near-term challenges, Jefferies projects a 13% adjusted net profit CAGR over FY26–28.
Target Price Action
- Citi: Downgrade to 'Sell' from 'Buy'; target price cut to Rs 2,675 from Rs 4,150
- Jefferies: Maintain 'Buy' with revised target price cut to Rs 3,675 from Rs 4,182
- Bloomberg analysts' consensus: Nine each for buy, sell and hold. Average TP of Rs 3,588, indicating 14% upside potential.
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