Buy This Stock With Rs. 3750 Target Price, Company Has Robust Order Book Of $1.4 Bn:Sharekhan

Top brokerage firm Sharekhan suggests investors to buy the stock of PI Industries Ltd. The company has 40 new products at various stages of development and importantly 35% of pipeline comprises non-agrochemical products.

Stock To Buy: Target Price

The Current Market Price (CMP) of PI Industries Ltd. is Rs. 3265. Sharekhan has estimated a Target Price for the stock at Rs. 3750. This stock has the potential to give a 14.85% return, in the upcoming 1 year. It is a large-cap stock with a market capitalization of around Rs. 49,105 crore.

Stock Outlook
Current Market Price (CMP)	Rs. 3265
Target Price	Rs. 3750
Potential 1 year return	14.85%
52 week high share price	Rs. 3,534.90
52 week low share price	Rs. 2,333.55

Financial Result

The company's revenue in FY22 was recorded at Rs. 5,300 crore, which is expected to be at Rs. 6,439 crore in FY23. Their EBITDA in FY22 stood at Rs. 41.7 crore, which is expected to be at Rs. 9.3 b in FY23. The company's adj. PAT in FY22 was recorded at Rs. 840 crore, which is expected to be at Rs. 1,135 crore in FY23.

Stock Advantages and risks: Sharekhan

According to Sharekhan, "We maintain our FY23-24 earnings estimate and introduce our FY25 earnings estimate in this report. PI's strong balance sheet provides ample scope for organic and inorganic growth over the medium to long term and its earnings growth outlook (we expect a revenue/EBITDA/PAT CAGR of 21%/27%%/30% over FY2022-FY2024E) remains robust supported by CSM order book of $1.4 billion and ramp-up of nine new products commercialised in last one year. At Current Market Price, stock trades at 35x its FY2024E EPS and 31x its FY2025E EPS."

However, delay in commissioning of projects or execution of orders or delayed orders by clients in the export business can affect revenue growth, higher-than-normal time lag in passing on the increase in raw-material prices could affect margins, and delay in utilisation of QIP funds, remain as key risks.

Expanding product portfolio

PI Industries is well positioned to sustain strong earnings growth momentum driven by sustained high growth in its CSM export business (robust order book of $1.4 billion and commercialisation of new molecules) and industry leading growth in domestic formulation business. Focus to expand product portfolio in non-agrochemcial space that is, pharma (target to take revenue share to 20-25%) and electronic chemicals would be supported by strong R&D focus. Potential acquisition in pharma space would improve long-term earnings growth outlook and makes us constructive on the stock.

Another year of above-normal monsoons bodes well demand for agrochemical products in India, ramp-up of recently launched products, plan to launch 5 new products in FY23 and focused approach towards horticulture segment through JIVARGO makes PI well-placed to exceed industry growth rates in the domestic market, the brokerage firm informs.

Company Portfolio:

Incorporated in 1947, PI Industries focuses on developing complex chemistry solutions in agri-sciences with an integrated approach. The company currently operates a strong infrastructure setup, consisting of three formulation facilities and nine multi-product plants under its three manufacturing facilities. These state-of-the-art facilities have integrated process development teams with in-house engineering capabilities. The company also maintains a strong research presence through its R&D facility at Udaipur and has a dedicated team of over 250 scientists and chemists.

Disclaimer

The above stock was picked from the brokerage report of Sharekhan. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution. Greynium Information Technologies, the author, and the brokerage house are not liable for any losses caused as a result of decisions based on the article.