outstanding results from PI. Q2fy14 revenues up 55.1% and net profit up a whopping 114%
_ _
Co has beaten ALL estimates by a HUGE margin.
Q2FY14 Ltd.
Edelweiss
|
IDFC
|
IIFL
|
|
|
|
Q2FY14e Revenue
|
366.6
|
421.9
|
441.4
|
|
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Q2FY14e EBITDA
|
55.0
|
61.2
|
74.6
|
|
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Q2FY14e PAT
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31.1
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33.9
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42.6
Outstanding results from the company. It has even surpassed the most optimistic projections (IIFL I suppose). It will be interesting to know the division wise performance in the con call.
Q2FY14 Results Announced…‘Exceptional’ is what I can say in short…wil wait for Press Release details as well as concall commentry but for the time being have kept my 184 review rate on hold…
Key Highlights :
Q2FY14 Revenue at 462.75 cr. (v/s our estimate of 364-385 cr. & IIFL’s most bullish estimate of 441 cr.) a YoY increase of 55.06 %
Q2FY14EBITDA at92.09 cr. (v/s our estimate of56.8-58.5 cr. & IIFL’s most bullish estimate of74.6 cr.) a YoY increase of111.07 % ----EBITDA margins at 19.90 % even higher than Q1FY14’s 19.43 % a very healthy sign
Q2FY14PAT at55.29 cr. (v/s our estimate of31.6-32.8 cr. & IIFL’s most bullish estimate of42.6 cr.) a YoY increase of114.05 % ----PAT margins at11.94 %similar toQ1FY14’s 11.95 % even while keeping Tax outgo at 32 % + of PBT and expensing a forex loss of 2.56 cr. v/s forex gain of 6.67 cr. in Q1FY14 and gain of 2.13 cr. in Q2FY13 a very healthy sign again
Finance Costs are lowest at 2.67 cr. — Debt seems to be near 140 cr.
Rgds.
Maheshji,
First of all thanks for your constant updates on PII.After the excellent performance last quarter,I had checked on PII’s website & saw that they have a good employee-employer relationship 
Such relations always help to get more output from the team.I had made an entry around 135.This quarter too.the financial performance has been GREAT.I remember having casually mentioned that PII’s PAT tends to remain more or less similar throughout the FY.Do you see that happening? I mean chances of a 60-70% PAT growth for FY14? Can we see 200 now…soon?
Sagar…
you see PAT for 1HFY14 is at 103.83 cr. without any exceptional items…This is higher than even last fiscal FY13’s full PAT at 96.34 cr…
Now, let’s go into second half…we will know in due course from Press Release what sort of growth rates are attained by each of the segment…but, unless CSM has turned out a one-off performance which is highly unlikely as Q3 and Q4 are normally the best for CSM, Kharif is now almost out and now Rabi will come into picture…in Rabi, co. is planning to introduce new products so that also we will take into account while omitting any tax benefits arising out of Jambusar contribution to be on a safer side…
Last year’s Rabi turned out a revenue of 215 cr…this year, in all probability, rabi will be one of the best in last several years as soil moisture is at its best becuase of good rains…still, we will assume only a modest 20 % growth which takes us to agri-input revenues at 258 cr…
Last year’s CSM turned out a revenue of 397 cr…this year, in all probability, CSM will turn out atleast 25-30 % growth in 2H, but, still, we will assume 200 cr. quarterly run rate which takes us to flat 2HFY14 growth for CSM i.e., 400 cr. in 2HFY14…
Hence, if we add up, it takes us to 658 cr. consolidated revenue in 2HFY14 (v/s 612 cr. of 2HFY13)…Now, last year, in 2HFY14, PAT margins were at 7.7 %…it is highly unlikely that company will turn out less than 9 % PAT margins in 2HFY14 – which when taken into calculation takes us to 2HFY14 PAT at 59.22 cr. (@ 9 % PAT) and full FY14 PAT at 163.05 cr. translating into an EPS of Rs. 11.97 on expanded equity capital of 13.62 cr…
Now, forget reasonable 9 % and calculate 2HFY14 PAT at last year’s PAt margin of 7.7 % which takes us to 50.66 cr. making to a lowest full FY14 PAT at 154.49 cr. translating into an EPS of Rs. 11.34…
To conclude, 11.34 is the lowest EPS we can expect from PI in FY14 and 1526.8 cr. is the lowest revenue we can expect from PI in FY14…If there is visibility of atleast 15-20 % growth in FY15 then PI, based on only historically commanded multiples has to trade in the range of 170-204 (15-18 TTM P/e band) by March’2014…and if our 9 % PAT calculation comes true then 180-215 range…here, rabi is assumed to grow by only 20 % and CSM is expected to turn out a flat YoY growth in 2H – if any of this seems challenged in Q3FY14 then the rangecan easily shift upwards…
Markets don’t work like this and usually overshoot on both sides – higher in good periods and lower in bad periods — hence, i will not be surprised if 200 comes very soon for PI and it settles at around 200-215 levels by Dec.13 – markets might desire to give a 18 forward p/e on our lower calculated estimates if concall commentry comes good…
Feel free to get back to me in case of any further query.
rgds.
I was expecting good results from PI, but this seems to be much better than expected. Will be waiting for the segment wise breakup. They also seem to have reduced long term debt slightly - always good to see debt reduction.
hi mahesh,
any views on the forex hedge loss of 10cr+ yet to be taken into the p&l according to the footnotes? that sure should dent the Q4 profit right?
thanks,
hemant
Two points on the forex loss:-
-
It is about 5-6% of expected profits for the year, so not that big a deal. If they had accounted for it in H1, the profit would have been 93cr (up from 49 cr yoy, a growth of about 90% on a half yearly basis)
-
Depending on the type of hedge, I would assume that the company would be making corresponding actual currency gain, so it would not be a net loss, to that effect.
hemant…your query is answered aptly by abhishek…not much to add…
what i am looking for is break-up of revenues between agri and csm…if its ~30 % growth for agri this qrtr. and csm has delivered 200-210 cr. then inspite of muted rabi which is highly unlikely, we are in for a great 2H and valuations could therefore catchup fast…
Rgds.
Press Release out…reading between the lines it seems :
Agri-input has posted revenues of 220 cr. in Q2FY14…
CSM has posted revenues of 242 cr. in Q2FY14…
Management seems confident of continued growth…concall scheduled tommorrow…
_The conference call is scheduled for _02:30pm IST on Friday, October 25, 2013. The dial in numbers are as follows: +91 22 6629 0301 or +91 22 3065 0122.__
Thanks Maheshji…
There isn’t much about PII on biz. channels,only heard
‘PII was up 20% today…the management is confident of extrapolating the performance going forward’
Since PII is a bit of a concept stock,it seems it had ‘been on the radar’ all the while.Looks like we have a re-rating on our hands…18-19X seems the new normal now.
Just a gut feeling.Waiting eagerly for the Concall outcome
Expect a better year going ahead: Salil Singhal, PI Industries
By ET Now | 24 Oct, 2013, 05.18PM IST
_In an interview with ET Now, Salil Singhal, CMD, PI Industries, shares his business outlook. Excerpts:
_**ET Now: In the first six months, you have already surpassed the profits that you have made in the whole of last year. How is business momentum looking for you?
Salil Singhal: **We had an excellent monsoon for this year. So, it is a long time after which the monsoons were so evenly spread. We also had a good ramp up of our exports with very good capacity utilisation and good values of exports. So that combined to give us the results that you see.
**ET Now: If you could just walk us through if this trajectory is likely to continue on account of the fact that the monsoons do remain robust, can we see an extrapolation into the coming quarters also?
Salil Singhal:** There will be definitely a fair amount of momentum. We had given a guideline of about 30% growth, but given what we have managed to achieve in the first half, we definitely expect to improve upon our earlier guideline. So we would look forward to a better year this financial.
**ET Now: Do you operationally do much better than what you have done till now in the second half and does that translate into even better bottom line growth than what your top line growth will suggest?
Salil Singhal**: Besides the increase in the sales turnover, there has been a lot of tightening of costs and management of our _forex_ and all that has resulted in this output. Our costs have been under good control. Our aggressive marketing and positioning of the products has been done appropriately by our team and all that has definitely contributed to the bottom line with the increasing top line. As you know, when there is a substantial increase in the top line, the percentages of costs shrink. So we have done well in that sense.
**ET Now: You were going to use the funds raised through the QIP for commissioning expansion of the recently commissioned unit at Jambusar. Has that already happened and is it contributing already?
Salil Singhal: **_Yes_, it has already started production. We have achieved the output that we wanted from the plant. It has a contribution to both the top and the bottom line and in fact, we have a Rs 100 crore capex plant within this financial year to build additional capacities for our new businesses, which is expected to start in the next couple of months.
**ET Now: How has the overall order book built up and what is the target by the second half of next year?
Salil Singhal: **There cannot be a target for order book. I will take as many orders as I can get. There is enough order book position for the company to build the capacities and to ramp up its export business.
Key Takeaways from PI Industries’ Q2FY14 concall :
(1) For Q2FY14, Agri-Input segment contributed 218 cr. to the revenues â a YoY growth of 11.8 %. For 1HFY14, Agri-Input segment contributed 414 cr. to the revenues translating to a YoY growth of 22.5 %
(2) For Q2FY14, CSM segment contributed 245 cr. to the revenues â a YoY growth of 137.8 %. For 1HFY14, CSM segment contributed 454 cr. to the revenues translating to a YoY growth of 129.2 %
(3) FY14 Guidance is revised upwards to 40-42 % growth in consolidated revenues from 30 % earlier. EBITDA margin expansion guuidance has been revised upwards to 300 basis points from 150 basis points earlier.
(4) ~EBITDA Margins stood at 17-18 % for Agri-Input segment and 20-21 % for Csm segment in 1HFY14. Jambusar plant is still operating at single digit margins.
(5) Going forward, for 2HFY14, a 225-250 cr. quarterly run rate is expected to continue for CSM segment.
(6) CSM segment order-book currently stands at USD 334 mn.
(7) Overall Capacity Utilisation for CSM segment is at ~85 % across all plants (old & new). However, with a slight tweaking in product-mix, more revenues/margins can be generated out of the same capacity.
(8) Management expects to commercialise two more products in 2HFY14 in CSM segment in addition to one product already commercialied in 1HFY14. Total products commercialised under CSM segment is expected to stand at 16 at the end of FY14.
(9) 50 % of the products (molecules) already commercialised in CSM are at early stage of their lifecycles and therefore offer scope of significant ramp-up going forward.
(10) In-lincensed products contributed ~60-65 % to Agri-Input segment revenues in 1HFY14.
View Post Concall :
Company has entered a new orbit of growth which is evident from upward revision in FY14 revenue growth guidance to 40-42 %. This looks reasonable from what 1HFY14 has shown us – a 225-250 cr. quarterly run-rate is what is guided by the management for CSM â and while taking that into our calculation, 1580-1600 cr. topline for FY14 looks achievable even with 20-25 % agri-input growth.
What is more heartening is the fact that management has guided for sustenance of 19 % + EBITDA margins with tight control over debt which signifies that we could see 11 % + PAT margins for FY14 on a revenue base of 1580-1600 cr. giving us a PAT of ~173 cr. translating to an EPS of Rs. 12.70.
In today’s macro environment, where delivering growth is a real challenge, we have this company which is consistently growing at 30 % + and has a visibility to grow at 25 % + even on current larger base with expanding margins atleast over next 3 years. Reduction of debt over last two quarters is a significant thing which can’t remain ignored by market participants, as free cash flow generating companies with minimal debt are always traded at rich valuations. Normal trading range for the company’s share should now shift to 191-228 by December’2013, post which Q3FY14 results should set the trend.
PI Industries receives Certificate of Excellence from Bayer Group of Companies India
On October 15, 2013, Bayer Group of Companies in India has awarded a certificate of excellence to PI Industries Ltd. and declared us as the “Winner - Global Sourcing India”. This is a significant achievement for PI and reaffirms our commitment to pursue excellence. This is a recognition of our efforts in achieving high levels of customer satisfaction. This achievement reiterates our leadership position in Custom Synthesis & Manufacturing in India.
PI Industries nominated for Agrow Awards
The Agrow Awards are recognized as a significant achievement amongst the global crop protection industry. PI Industries Ltd. has been nominated under two categories in the Agrow Awards 2013. Under the “Best Supplier” category, PI has been nominated for its Fine Chemicals exports and under the “Best Marketing Campaign” category, PI has been nominated for its marketing campaign for its rice herbicide brand ‘Nominee Gold’.
This script has given amazing returns. The fantastic work done by Mahesh Shah helped me build conviction in this stock. I entered @ 129 and it has given superb returns since. Even though I am convinced about the long term prospects of the business, the current valuation seem very high and I am confused whether to book profit or stay invested for long which was my original plan.
Hi Ankur,
If you are already invested in small amounts (i.e. miniscule part of your portfolio), and your goal is long term returns (i.e. minimum holding period 2-3 years) then my advise will be to remain invested as this is an excellent co. in the making and if 2HFY14 is as robust as 1H then the share can go into a completely new orbit.
Having said that, a disclaimer, I have booked profit in 50 % of my holdings in the company as my holding was a very concentrated one and I felt a need to diversify into other agri-opportunities which are available at decent valuations.
Rgds.
Since my holding was a small one and I was comfortable with the returns I was getting, I have booked my profits.
However, I think the sector has a great potential and so I am also looking at other companies. Do you think Dhanuka Agritech deserves some allocation??
yes ankur…have recently started accumulating Dhanuka in agri space as ground feedback seems to have turned positive…however, two cautions, one - its operating on an asset-light model wherein it is not having any technical manufacturing capability and is just a formulator…one can’t expect PI- or Rallis- type valuation being commanded by dhanuka unless management turns aggressive in allied areas but the company has been doing well since many years and what i like is its approach strategy…second caution is likely forex losses in case of adverse currency fluctuation as it is dependent on MNCs for its products…lets not discuss further on this co. in this thread and if you have any queries on it post it separately on its respective thread…
Rgds.
PI Industries to enter MSCI Small Cap Index from 26th November 2013…
Rgds.