PI Industries Q3 - New Product And CSM Drive Export Growth, Margins; Positive Outlook: Axis Securities

Domestic Pesticide Business continues to be affected by Macro Headwinds.

<div class="paragraphs"><p>(Source: PI Industries website)</p></div>
(Source: PI Industries website)

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Axis Securities Report

PI Industries Ltd.'s Q3 FY24 numbers were in line with our estimates. One-off gain from the reversal of theft in last Q2 FY24 led to beat on Ebitda and profit after tax. Consolidated Revenue came in line with our estimates, up 18%/-10% YoY/QoQ.

Ebitda beat our estimates by 15% as gross margins improved by 640 basis points YoY on account of better mix. This resulted in an Ebitda margin of 29% versus. 26% both in Q3 FY23/Q2 FY24.

PI Industries profit after tax stood at Rs 449 crore, up 28%/-7% YoY/QoQ, beating our estimate by 27%

Valuation and recommendation:

As we roll forward our estimates to September FY26E, we value the stock at 30 times September 26E to reflect an improved product mix, strong margins, and a strong growth outlook.

We maintain a 'Buy' rating on the stock with a revised target price of Rs 4,200/share, implying an upside potential of 24% from current market price.

Key risks to our estimates and TP

Global recessionary environment, especially a long recession could affect demand for upstream players

The impact of El Nino on Indian agriculture can affect the demand for PIs products

A delay in Capex and the commercialisation of new molecules could affect growth. Stress on return on capital employed in initial phases of acquisition.

Click on the attachment to read the full report:

Axis Securities PIIndustries Q3 FY24 Results Review.pdf
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