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Alpha | PI Industries Ltd.

Alpha |  PI Industries Ltd.


PI Industries Ltd.: Sturdy participant in agrochemicals house

PI was based in 1946 as an edible oil refinery by late Mr. PP Singhal. Later, the corporate entered the agrochemical formulations enterprise. Within the mid-Nineteen Nineties, PI diversified into customized synthesis and manufacturing (CSM) exports for modern agrochemical corporations globally. Presently, PI operates within the home agricultural inputs and CSM exports segments. It’s a main participant within the home agricultural inputs sector, primarily dealing in agrochemicals and plant vitamins. In CSM’s export section, its enterprise pursuits embrace customized synthesis and contract manufacturing of chemical substances, which constitutes techno-commercial analysis of chemical processes, course of growth, pilot and laboratory scale-up, in addition to industrial manufacturing . The PI group has 4 built-in manufacturing services unfold over greater than 100 acres of land.


The corporate has a variety of chemical merchandise in classes corresponding to Pesticides, Herbicides and Fungicides. It additionally has some merchandise within the specialty division. Other than that, the corporate affords CSM (customized synthesis and manufacturing options) starting from analysis to manufacturing.

Subsidiaries: As in FY23, the Firm has 7 wholly owned subsidiaries and a couple of joint ventures.

Key rationale:

  • Established place – A presence of greater than 5 a long time within the home agricultural inputs enterprise, a wholesome product combine, management in varied generic product segments and an growing variety of launches by means of the ILCM (in-licensing and co-marketing) route ) have helped the group set up itself as one of many high 10 gamers on this house. Other than fiscal 2020, the place delayed monsoon and erratic rains throughout the 12 months affected gross sales, the home enterprise has witnessed regular development during the last 5-6 fiscal years pushed by introduction of latest molecules and elevated market penetration. With a robust product line-up, favorable political surroundings and regular monsoon, the home enterprise is anticipated to register wholesome income development within the medium time period.
  • Acquisition – PI Well being Sciences Ltd. (PIHS) acquired Archimica SpA, Italy, on April 27, 2023. Archimica is a extremely reputed small molecule API producer and CDMO based mostly in Italy, working for 75 years in Europe. PIHS additionally accomplished the acquisition of Therachem Analysis Medilab (India and US) and Solis Pharmachem (India) on June 2, 2023. TRM (Therachem Analysis Medilab) is a supplier of modern chemistry-driven options in chemistry analysis medicinal, analysis and growth of processes, which specializes within the space of ​​Uncommon Ailments. All of the above acquisitions quantity to Rs 856 crore.
  • Q1FY24 – PI Industries reported total income development of 24% YoY in Q1FY24 to Rs 1,910 crore, primarily supported by export income of Rs 1,563 crore, up 37% YoY. Home revenues had been subdued because of delayed monsoon, resulting in ~13% quantity decline as centered efforts had been made to realize income high quality and volume-efficient working capital ranges. Gross margin improved to 47%, an enchancment of ~267 bps YoY, primarily because of higher product combine and pharmaceutical enterprise. EBITDA recorded 35% YoY development to Rs 468 crore, and EBITDA margin improved ~209 bps to 24% because of favorable product combine and working leverage.
  • Monetary efficiency – The corporate generated income and PAT CAGR of 23% and 28% over the 5-year interval (FY18-23). The corporate maintained a mean EBITDA margin of 20%+ during the last 9 years. The corporate’s steadiness sheet is powerful and it has no debt on its steadiness sheet. The 5-year common ROE and ROCE is round 17% and 22% for the FY 2018-22 interval.


India is without doubt one of the main gamers within the agricultural sector internationally and is the principle supply of livelihood for roughly 55% of India’s inhabitants. India has the world’s largest herd of cattle (buffalo), the biggest space planted with wheat, rice and cotton, and is the world’s largest producer of milk, pulses and spices. In keeping with Inc42, the Indian agriculture sector is projected to develop to US$24 billion by 2025. The Indian meals and grocery market is the sixth largest on this planet, with retail contributing 70% of gross sales. India’s exports of agricultural and processed meals merchandise stood at $43.37 billion in FY23 (April 2022-January 2023). As per the second advance estimates for 2022-23 (Kharif solely), the entire meals grain manufacturing within the nation is estimated at 153.43 million tonnes. India is without doubt one of the largest exporters of agricultural merchandise on this planet. In April-December 2022, the entire worth of exports of agricultural merchandise elevated to $19.7 billion from $17.5 billion throughout the identical interval of the final fiscal 12 months.

Development drivers:

  • The agricultural providers sector has additionally seen a pointy rise in investments with a cumulative FDI influx of $3.02 billion between April 2000 and March 2023.
  • Initiatives like Kisan Rath (cell app for farmers, FPOs and merchants), 200+ Kisan Rails and Krishi Udaan Scheme for transportation of agricultural produce, perishable cargo hubs, chilly storage services at airports and inland container depots, in addition to cargo terminals and warehouses.
  • The Union Funds 2023-24 focuses on reviving rural demand by growing disposable earnings, allocation to farms and elevated allocation of funds for rural infrastructure, connectivity and mobility to create long-term jobs.

Rivals: BASF India, Bayer Crop Science, and many others.

Pair evaluation:

Though PI Industries’ P/E is greater than its friends, the extent of enterprise development by way of CAGR exhibits the potential of PI Industries. Then again, BASF has generated losses previously and the underside line is traditionally very unstable, leading to uneven development.


CSM’s export section is characterised by a considerably risk-free enterprise mannequin, offering wholesome income visibility and steady profitability. PI group is without doubt one of the pioneers of CSM within the subject of agrochemicals in India. The corporate’s CSM export order guide in Q1FY24 is round $1.8 billion. PI Industries stays cautiously optimistic about reaching its income development goal of 18% to twenty% for the present fiscal 12 months. The Administration is assured of resuming the trail of development within the home enterprise with the normalization of rainfall throughout the second half of the kharif season. In addition they preserve the momentum of latest product launches. 5 modern merchandise are deliberate for this fiscal 12 months. Within the first quarter, the corporate launched EKETSU. EKETSU is India’s first three-way herbicide combination that gives most weed management and efficacy for full rice herbicide management.


We imagine PIIND is nicely positioned for future development given the revival of the home enterprise and the robust efficiency of the export enterprise. Moreover, the corporate’s current acquisitions will pave the way in which for extra development. We advocate a BUY score on the inventory with a goal value (TP) of Rs 4,077, 37 occasions FY25E EPS.


  • Demand Associated Danger – Any slowdown in demand for crop safety chemical substances is more likely to influence CSM’s enterprise execution and due to this fact income.
  • Monsoon threat – The failure of the monsoon (and/or opposed climate circumstances) coupled with the COVID-19 associated setback may put strain on the demand for agricultural inputs for the upcoming Kharif season.
  • Working capital threat – The agrochemical business is characterised by working capital-intensive operations, because of the nice want for stock, the seasonality of demand and the credit score granted to retailers and distributors.

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