Q2FY25 Result Update

Retail Equity Research

PI Industries Ltd BUY

Sector: Chemicals 18th December 2024

Key Changes Target Rating Earnings Target Rs. 4,480

Stock Type Bloomberg Code Sensex NSE Code BSE Code Time Frame CMP Rs. 3,886
Mid Cap PI:IN 80,684 PIIND 523642 12 Months Return +15%
Data as of: 17-Dec- 2024
Solid Q2 results; Outlook Positive
Company Data
PI Industries manufactures plant protection and specialty plant nutrient products
Market Cap (Rs. cr) 58,958
and solutions under its agri-inputs business. It is also a leading custom synthesis
52 Week High — Low (Rs.) 4,801 - 3,060 and manufacturing (CSM) company in India, providing contract research and con-
Enterprise Value (Rs. cr) 56,467 tract manufacturing services to global innovators.
Outstanding Shares (cr) 15.2 • Standalone revenue increased 8.3% YoY to Rs. 2,131cr in Q2FY25, led by growth in
Free Float (%) 53 exports. Exports grew 7.8% YoY to Rs. 1,761cr. Agchem exports increased ~10%
Dividend Yield (%) 0.4 due to volume growth and ~42% YoY growth in new products.
6m average volume (lacs) 31.1
• Consolidated revenue from Pharma (2.0% of exports) decreased 42.8% YoY to Rs.
Beta 0.8
Face value (Rs.) 1.0 41cr owing to high inventory at the innovators. The management expects the reve-
Shareholding (%) Q4FY24 Q1FY25 Q2FY25 nue to recover in H2FY25 with strong current orders.
Promoters 46.1 46.1 46.1 • Due to a reduction in supply to institutional customers, domestic revenues de-
FII’s 20.3 18.8 19.0
creased 5.0% to Rs. 460cr. Revenue from branded products increased 7% YoY and
MFs/Insti 24.3 26.0 26.4
Public 8.0 7.9 7.3 revenue from biological products rose 18% YoY.
Others 1.3 1.3 1.3 • EBITDA surged 23.7% YoY to Rs. 685cr and margin improved 400bps YoY to 32.1%
Total 100.0 100.0 100.0 due to better product mix and operative leverage. Meanwhile, the overhead expens-
Promoters’ pledge Nil Nil Nil
es increased due to the scale-up of exports and promotion expenses related to the
Price Performance 3 Month 6 Month 1 Year
launch of new products.
Absolute Return -17.2% 6.8% 14.3%
Absolute Sensex -2.9% 4.8% 12.9% • PAT increased 20.2% YoY to Rs. 558cr, which was partly impacted by an 85.9%
Relative Return -14.3% 2.0% 1.4% YoY increase in tax expenses.
*over or under performance to benchmark index
Valuation
PI Industries has delivered a robust Q2FY25 performance, defying weak global
market conditions. The company's future appears promising, driven by growing
demand for its newly launched products and sustained momentum in new enquiries.
With a strong product pipeline, including four new brands launched in H1FY25 and
several more in development, PI Industries is well-positioned to capitalise on the
increasing demand and maintain its growth trajectory in the CSM business.
Y.E March (cr) FY24A FY25E FY26E Therefore, we reiterate our BUY rating on the stock, with a revised target price of
Sales 7,145 8,253 9,594 Rs. 4,480, based on 35x FY26E adjusted EPS.
Growth (%) 14.0 15.5 16.3
EBITDA 2,026 2,201 2,581 Quarterly Financials (Standalone)
EBITDA Margin (%) 28.3 26.7 26.9
PAT Adjusted 1,731 1,659 1,939 Rs.cr Q2FY25 Q2FY24 YoY (%) Q1FY25 QoQ (%) H1FY25 H1FY24 YoY (%
Growth (%) 42.9 -4.1 16.9 Sales 2,131 1,969 8.3 2,012 5.9 4,143 3,798 9.1
Adjusted EPS 114.1 109.4 127.8 EBITDA 685 553 23.7 631 8.5 1,316 1,029 27.9
Growth (%) 42.9 -4.1 16.9 Margin (%) 32.1 28.1 400bps 31.4 70bps 31.8 27.1 470bps
P/E 33.9 35.5 30.4 EBIT 619 490 26.2 566 9.3 1,185 907 30.7
P/B 6.8 5.7 4.8 PBT 708 545 29.9 634 11.7 1,342 1,006 33.3
EV/EBITDA 27.8 25.7 21.5 Rep. PAT 559 465 20.2 498 12.1 1,057 860 22.9
ROE (%) 19.9 16.1 15.8
Adj PAT 559 465 20.2 498 12.1 1,057 860 22.9
D/E 0.0 0.0 0.0
EPS (Rs.) 36.8 30.6 20.2 32.9 12.1 69.7 56.7 22.9

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Key Concall Highlights
• The company lowered its FY25 growth guidance to high single digits or early double digits from a double-digit projection due to challeng-
es in the global market and fluctuations in demand. Uneven rainfall has impacted the sowing and acreage of crops in the domestic market

• In H1FY25, four new brands were launched: PRESSEDO®, a broad-spectrum novel insecticide; DORITO®, a broad-spectrum insecticide
targeting cotton and brinjal crops; OSHEEN ULTRA®, a superior-quality formulation for sucking pest control; and SOLJU, a microbial
biofertilizer. The company is planning to launch CARVINT, an insecticide, and BYROCK, a fungicide, in H2FY25. The company also has
over 20 products at various stages of development.

• The acquisition of Plant Health Care was completed in Q2FY25. This acquisition is expected to help the company increase top-tier export
products, intellectual property, and protein and peptide platforms for Agri-biologicals. The company's focus is to commercialise Plant
Health Care's products in India, which are already commercialised in the US, Brazil, and Europe.

• The R&D facilities in Hyderabad have started operations, and the renovation of the facility in Jaipur has been completed. The GMP Kilolab
in Italy is expected to commence operations in Q1FY26.

• The pace of enquiries is robust, with over 50% of those coming from outside the agrochemical industry being for innovative, patented
products. The company's investments in advanced research, novel chemistries, and cutting-edge technologies are driving this trend.

Revenue EBITDA

EBIT PAT

Change in Estimates
Old estimates New estimates Change (%)

Year / Rs cr FY25E FY26E FY25E FY26E FY25E FY26E

Revenue 9,146 10,701 8,253 9,594 -9.8 -10.3
EBITDA 2,347 2,726 2,201 2,581 -6.2 -5.3

Margins (%) 25.7 25.5 26.7 26.9 100bps 140bps

Adj. PAT 1,746 2,043 1,659 1,939 -4.9 -5.1

EPS 115.1 134.7 109.4 127.8 -4.9 -5.1

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Standalone Financials

Profit & Loss Balance Sheet

Y.E March (Rs cr) FY22A FY23A FY24A FY25E FY26E Y.E March (Rs cr) FY22A FY23A FY24A FY25E FY26E
Sales 5,077 6,270 7,145 8,253 9,594 Cash 1,322 2,132 2,544 2,558 3,548
% change 16.4 23.5 14.0 15.5 16.3
Accounts Receiva-
EBITDA 1,111 1,520 2,026 2,201 2,581 791 693 703 1,411 1,535
ble
% change 12.8 36.8 33.3 8.6 17.3 Inventories 1,332 1,345 1,167 1,035 1,049
Depreciation 198 222 246 285 339 Other Cur. Assets 1,260 1,240 1,604 1,607 1,611
EBIT 913 1,298 1,780 1,915 2,242 Investments 181 185 1,203 1,823 2,043
Interest 12 36 9 10 10 Gross Fixed Assets 2,823 3,124 3,601 4,426 5,386
Other Income 100 159 224 236 271 Net Fixed Assets 2,319 2,417 2,538 2,786 3,360
PBT 1,001 1,422 1,995 2,141 2,502 CWIP 64 61 117 374 380
% change 11.0 42.1 40.3 7.3 16.9 Intangible Assets 155 164 200 234 275
Tax 181 210 264 482 563 Other Assets 205 98 112 118 124
Tax Rate (%) 18.1 14.8 13.2 22.5 22.5 Total Assets 7,628 8,336 10,227 11,946 13,924
Reported PAT 820 1,211 1,731 1,659 1,939 Current Liabilities 1,167 1,142 1,466 1,519 1,582
PAT att. to common Provisions 6 9 17 26 29
820 1,211 1,731 1,659 1,939
shareholders
Debt Funds 326 60 62 67 72
Adjustment - - - - -
Other Liabilities 92 29 0 0 0
Adj PAT 820 1,211 1,731 1,659 1,939
Equity Capital 15 15 15 15 15
% change 15.4 47.8 42.9 -4.1 16.9
Reserves & Sur-
No. of shares (cr) 15.2 15.2 15.2 15.2 15.2 6,024 7,082 8,666 10,319 12,225
plus
Adj EPS (Rs.) 54.0 79.8 114.1 109.4 127.8 Shareholder’s Fund 6,039 7,097 8,681 10,334 12,240
% change 12.6 47.8 42.9 -4.1 16.9
Total Liabilities 7,628 8,336 10,227 11,946 13,924
DPS (Rs.) 6.0 10.0 15.0 14.0 16.0 BVPS (Rs.) 398 468 572 681 807

Cash Flow Ratio

Y.E March FY22A FY23A FY24A FY25E FY26E Y.E March FY22A FY23A FY24A FY25E FY26E
Net inc. + Depn. 1,018 1,433 1,977 1,945 2,279 Profitab. & Return
Non-cash adj. -6 -32 -47 102 66 EBITDA margin (%) 21.9 24.2 28.3 26.7 26.9
Changes in W.C -527 101 169 -577 -138 EBIT margin (%) 18.0 20.7 24.9 23.2 23.4
C.F. Operation 485 1,502 2,099 1,471 2,207 Net profit mgn.(%) 16.1 19.3 24.2 20.1 20.2
ROE (%) 13.6 17.1 19.9 16.1 15.8
Capital exp. -336 -301 -477 -825 -959
ROCE (%) 14.3 18.1 20.4 18.4 18.2
Change in inv. 2 -163 -586 -600 -200 W.C & Liquidity
Other invest.CF 715 1,390 1,228 186 190 Receivables (days) 56.9 40.4 35.9 62.4 58.4
C.F – Investment 381 926 166 -1,239 -969 Inventory (days) 174.6 143.6 118.9 100.4 94.9
Issue of equity - - - - - Payables (days) 115.8 89.3 109.1 108.8 106.9
Current ratio (x) 3.7 4.7 4.1 4.3 4.8
Issue/repay debt -91 -284 -21 5 5
Quick ratio (x) 2.3 3.3 3.0 3.4 4.0
Dividends paid -76 -114 -174 -212 -243 Turnover & Leverage
Other finance.CF -8 -33 -9 -10 -10 Gross asset T.O (x) 1.9 2.1 2.1 2.1 2.0
C.F – Finance -175 -431 -205 -217 -248 Total asset T.O (x) 0.7 0.8 0.8 0.7 0.7
Int. coverage ratio (x) 74.2 36.6 193.4 198.0 221.7
Chg. in cash 207 495 -39 14 990
Adj. debt/equity (x) 0.1 0.0 0.0 0.0 0.0
Closing cash 1,322 2,132 2,544 2,558 3,548
Valuation
EV/Sales (x) 8.2 7.0 7.9 6.8 5.8
EV/EBITDA (x) 37.6 28.9 27.8 25.7 21.5
P/E (x) 52.2 37.9 33.9 35.5 30.4
P/BV (x) 7.1 6.5 6.8 5.7 4.8

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Recommendation Summary (last 3 years)
Dates Rating Target
9-Feb-21 BUY 2,680
9-Aug-21 BUY 3,640
8-Feb-22 BUY 3,010
30-May-22 BUY 3,200
21-Nov-22 BUY 3,860
27-Sep-23 BUY 4,000
29-May-24 BUY 4,180
18-Dec-24 BUY 4,480
Rating Criteria
Ratings Large caps Midcaps Small Caps
Buy Upside is above 10% Upside is above 15% Upside is above 20%
Accumulate - Upside is between 10%-15% Upside is between 10%-20%
Hold Upside is between 0% - 10% Upside is between 0%-10% Upside is between 0%-10%
Reduce/sell Downside is more than 0% Downside is more than 0% Downside is more than 0%
Not rated/Neutral
Definition:
Buy: Acquire at Current Market Price (CMP), with the target mentioned in the research note; Accumulate: Partial buying or to accumulate as CMP dips in the future; Hold: Hold the
stock with the expected target mentioned in the note.; Reduce: Reduce your exposure to the stock due to limited upside.; Sell: Exit from the stock; Not rated/Neutral: The analyst has
no investment opinion on the stock.
Symbols definition: Downgrade
Upgrade No Change

To satisfy regulatory requirements, we attribute ‘Accumulate’ as Buy and ‘Reduce’ as Sell.

The recommendations are based on 12 month horizon, unless otherwise specified. The investment ratings are on absolute positive/negative return basis. It is possible that due to
volatile price fluctuation in the near to medium term, there could be a temporary mismatch to rating. For reasons of valuations/ return/lack of clarity/event we may revisit rating at
appropriate time. Please note that the stock always carries the risk of being upgraded to BUY or downgraded to a HOLD, REDUCE or SELL.
Not rated/Neutral- The analyst has no investment opinion on the stock under review.
DISCLAIMER & DISCLOSURES
Certification: I, ANIL R, author of this Report, hereby certify that all the views expressed in this research report reflect our personal views about any or all of the subject issuer or securi-
ties. This report has been prepared by the Research Team of Geojit Financial Services Limited, hereinafter referred to as Geojit.
For General disclosures and disclaimer: Please Visit : https://www.geojit.com/research-disclosures#fundamental-research
CRISIL has provided research support in preparation of this research report and the investment rational contained herein along with financial forecast. The target price and recommenda-
tion provided in the report are strictly Geojit’s views and are NOT PROVIDED by CRISIL. Further, CRISIL expresses no opinion on valuation and the associated recommendations. CRISIL
has no financial liability whatsoever, to the subscribers / users of this report.
Group companies of Geojit Financial Services Limited are Geojit Technologies Private Limited (Software Solutions provider), Geojit Credits Private Limited (NBFC), Geojit Investment
Limited (financial Services Company), Geojit Techloan Private Ltd( P2P lending ) Geojit IFSC Ltd ( a company incorporated under IFSC Regulations, Qurum Business Group Geojit Securi-
ties LLC ( a joint venture in Oman engaged in Financial Services ), Barjeel Geojit Financial Services LLC (a joint venture in UAE engaged in Financial Services), Aloula Geojit Capital
Company (a joint venture in Saudi Arabia (Under Liquidation)) and BBK Geojit Business Consultancy and Information KSC (C) (a joint venture in Kuwait-engaged in Financial services ). In
the context of the SEBI Regulations on Research Analysts (2014), Geojit affirms that we are a SEBI registered Research Entity and in the course of our business as a stock market inter-
mediary, we issue research reports /research analysis etc. that are prepared by our Research Analysts. We also affirm and undertake that no disciplinary action has been taken against
us or our Analysts in connection with our business activities.
In compliance with the above mentioned SEBI Regulations, the following additional disclosures are also provided which may be considered by the reader before making an investment
decision:
1. Disclosures regarding Ownership:
Geojit confirms that:
It/its associates have no financial interest or any other material conflict in relation to the subject company (ies) covered herein, at the time of publication of the research report
It/its associates have no actual beneficial ownership of 1% or more in relation to the subject company (ies) covered herein. at the end of the month immediately preceding the date of
publication of the research report.
Further, the Analyst confirms that:(i) He, his associates and his relatives have no financial interest in the subject company (ies) covered herein, and they have no other material conflict
in the subject company, at the time of publication of the research report (ii) He, his associates and his relatives have no actual/beneficial ownership of 1% or more in the subject compa-
ny covered, at the end of the month immediately preceding the date of publication of the research report
2. Disclosures regarding Compensation:
During the past 12 months, Geojit or its Associates:
(a) Have not received any compensation from the subject company; (b) Have not managed or co-managed public offering of securities for the subject company (c) Have not received
any compensation for investment banking or merchant banking or brokerage services from the subject company. (d) Have not received any compensation for products or services other
than investment banking or merchant banking or brokerage services from the subject company (e) Have not received any compensation or other benefits from the subject company or
third party in connection with the research report (f) The subject company is / was not a client during twelve months preceding the date of distribution of the research report.
3. Disclosure by Geojit regarding the compensation paid to its Research Analyst:
Geojit hereby confirms that no part of the compensation paid to the persons employed by it as Research Analysts is based on any specific brokerage services or transactions pertaining
to trading in securities of companies contained in the Research Reports.
4. Disclosure regarding the Research Analyst’s connection with the subject company:
Digitally signed
It is affirmed that I, ANL R, Research Analyst (s) of Geojit have not served as an officer, director or employee of the subject company
5. Disclosure regarding Market Making activity: ANIL R by ANIL R
Date: 2024.12.18
11:21:29 +05'30'
Neither Geojit/its Analysts have engaged in market making activities for the subject company.
6. “Registration granted by SEBI, membership of BASL (in case of IAs) and certification from NISM in no way guarantee performance of the intermediary or provide any assurance of returns to inves-
tors.”

“Investment in securities market are subject to market risks. Read all the related documents
7. Standard Warning:
carefully before investing.”
Please ensure that you have read the “Risk Disclosure Documents for Capital Market and Derivatives Segments” as prescribed by the Securities and Exchange Board of India before
investing.
Geojit Financial Services Ltd. Registered Office: 34/659-P, Civil Line Road, Padivattom, Kochi-682024, Kerala, India. Phone: +91 484-2901000, Website: www.geojit.com. For investor
queries: [email protected]. Compliance officer: Ms. Indu K. Address: Geojit Financial Services Limited, 34/659 P, Civil Lane Road, Padivattom, Kochi – 682024; Phone: +91 484-
2901367; Email: [email protected]. For grievances: Grievance Officer: Mr Nitin K; Address: Geojit Financial Services Limited,34/659 P, Civil Lane Road, Padivattom, Kochi –
682024; Phone: +91 484-2901363; Email: [email protected]. Corporate Identity Number: L67120KL1994PLC008403, SEBI Stock Broker Registration No INZ000104737, Research
Entity SEBI Reg No: INH200000345, Investment Adviser SEBI Reg No: INA200002817, Portfolio Manager: INP000003203, Depository Participant: IN-DP-325-2017, ARN Regn.Nos:0098,
IRDA Corporate Agent (Composite) No.: CA0226.

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