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Motilal Oswal Report
Domestic brokerage firm Motilal Oswal largely maintains its FY27/FY28 earnings estimates for PI Industries Ltd. and has reiterated its Buy rating with a target price of Rs 3,500 (based on 33x FY28E EPS, i.e. a discount of ~10% to the company's six-year historical P/E at 37x).
PI Industries reported a weak quarter as revenue declined 12% YoY, primarily due to a 15% YoY dip in the CSM business, attributed to the global slowdown and cautious customer scheduling (volume declined 14% YoY).
Domestic Agri also reported a revenue decline of 9% YoY, while the pharma business grew 23% YoY. Gross margins expanded 280bp YoY due to a better product mix and operational efficiency, while lower volumes led to adverse operating leverage, thereby resulting in an overall Ebitda margin contraction of 400bp YoY.
Going forward, the brokerage remain cautiously optimistic on FY27, supported by a strong order book, committed customer offtake plans, and the planned launch of over 5+ new molecules in the CSM business, which should accelerate growth in 2HFY27.
In addition, the Biologicals pipeline and potential inorganic opportunities continue to strengthen the growth outlook.
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