Agro Chemicals Stock With Strong Balancesheet Gets Buy Call For Good Gains: Sharekhan

Sharekhan has recommended investors to buy the shares of PI Industries Ltd with a target price of Rs 4200 apiece. The current market price of the stock is Rs 3480 apiece. According to the analyst, "strong order book, likely pharma foray present long growth runway" for the company. If you buy PI Industries shares today, you are set to receive a return of 21%. Check key takeaways below:

1. PI Industries Stock Performance & Return

The last trading price of the stock is Rs 3480 apiece with an intraday decline of 1.69% (December 15, 2022). The stock's 52-week high is Rs 3698 apiece and 52-week low is Rs 2334 apiece, respectively.

The large cap stock has given multibagger returns to investors with last 5-years return at 271%, 3-years return 135%, and 1-year return at 13%. The company has a market capitalisation of Rs 52,797.91 crore.

2. PI Industries Potential Pharma Acquisition

PI Industries is focused to close an acquisition of a pharma company and with respect to that the company has already inducted seasoned leadership team for a foray into the pharmaceutical sector.

The target is to acquire a domestic or international pharma company, which provides access to technology, customers, regulator-approved products/assets as it would help grow faster as compared to organic growth.

3. Valuation

According to Sharekhan, "PI's strong balance sheet provides ample scope for organic and inorganic growth over the medium to long term and its earnings growth outlook (expect revenue/EBITDA/PAT CAGR of 21%/25%%/27% over FY2022-FY2025E) remains robust supported by CSM order book of $1.8 billion, ramp-up of nine new products commercialised in last one year and launch of new products in FY23. Hence, we maintain a Buy rating on PI Industries with an unchanged PT of Rs. 4,200. At CMP, stock trades at 36.2x its FY2024E EPS and 31.7x its FY2025E EPS."

Key Risks: 1) Delay in commissioning of projects or execution of orders or delayed orders by clients in the export business can affect revenue growth, 2) A higher-than-normal time lag in passing on the increase in rawmaterial prices could affect margins and 3) Delay in utilisation of QIP funds.

4. About PI Industries

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-ofthe-art facilities have integrated process development teams with in-house engineering capabilities.

 

Disclaimer

The stock has been picked from the brokerage report of Sharekhan. Greynium Information Technologies, the Author, and the respective Brokerage House are not liable for any losses caused as a result of decisions based on the article. Goodreturns.in advises users to check with certified experts before taking any investment decision.