Hi Mahesh,
Any idea on the Sony association contributing to revenue? Is it part of the said Q-3 expansion?
Thank You
Vinod
No Vinod… I think still Sony thing is 1-1.5 years away…
Rgds.
PI Ind. board will meet on 7th November 2012 to announce Q2FY13 results...Provided below are the estimates :
|
|
Q2FY13e |
Q2FY12 |
|
|
|
|
|
Revenue Agri-Inputs CSM |
265 â 295 140-160 125-135 |
245 153 92 |
|
|
|
|
|
EBITDA |
48 - 51 |
37.3 |
|
|
|
|
|
PAT |
25.5 â 27.2 |
19.36 |
|
|
|
|
|
EPS |
10.1 â 10.8 |
7.71 |
Have upgraded PI Industries to ‘Buy’ from ‘Hold’ earlier…PI Industries should do very well inCY2013 and might give good price appreciation similar to the one given in2H2011 because of multiple factors coinciding for better…will update on detailed rationale soon…feel free to get back to me in case of any query…
Rgds.
PI Industries Q2 CONCALL -23 Nov, 2012
Margins maintained at steady level - despite inclement condns for dopmestic business
Jambusar is on course to be commissioned this Qr. CSM business visibility very good. In next qrs 2-3 commercial scale products will be added.
Agri business - good volume growth in domestic business;
Inv+recv high at Q2 - but mainly for new scale of business in CSM;Operating leverage benefits should come in because of the scale up in csm
Credit rating for long term upgraded to A+ - which speaks highly of our business operations
1). first season for new product launch Oshion. how was it?
met expectations. next season with better understanding of the product and consitions, should do in line with our expectations.
2). Guidance
maintain guideline of 30% ; 2nd half to be much better ;
30% - domestic 20-25%; rest by exports
)- liquidating inventory build up? - Yes
)- ebitda guidance slight improvements - maintain. yes.
3). domestic 28% growth - breakup
)- mostly volume growth - in Q2; Q1 there was price hike gains.
4). Current orderbook
318 mn orderbook csm
5). abhijit akela -iifl
Margins of Q2 vs q1 of last year - lower?
Gen Q2 margins are lower because of different product mix nature ; q2 vs q2 gen same 15% achieved.
have we reached peak utilisation ? generally we expect a run rate of 100-130 Cr
Q2 last year 200% growth; so base very high;this year also demand good. - h2 will do 60-65% of the revenues; Jambusar will adding ~ 40 Cr in H2; usually we only do 30-35% in H1 CSM - thats how typically customers plan the order offtakes
Domestic - hows the overall industry inventory pile-up situation
end of first season - overall inventory issue in industry is not significant
6). removing CSM business currency fluctuation, are we seeing a degrowth?
No
as mentioned before expecting 2 or 3 new products at commercial scale next qr. initially vol small, but as registration picks up - this will keep growing; this meansvery good visibility at existing csm plant (excl jambusar) even beyond fy14.
so u r saying 30-355 existing csm will keep growing?
yes
7). Cap utilisation
what will be jambusar utilisation in FY13 - 45% or so
90-95% cap utilisation at existing.
but process efficiencies come in; adding some balancing equipment; we can get more out of existing
8). Break up of the segments
agri -q2 - 194 cr; h1 336 cr
csm q2 105 cr; 202 cr h1
9). jambusar ph2 expansion?
negotiating new business; as soon as tied up which requires putting upa facility -2nd ph will strart;
ph2 jambusar - investment will be of what order? same as 200 cr of ph1?
investment wont be as significant; only in production plant; not in common infrastructure.t/f early next financial year perhaps
10). Currency break up?
us$ - 99% currency
11). Capex guidance for fy13 & fy14?
capex guidance fy13 - 150 Cr; fy14 - difficult to say now, but once materailsed will be again 100 Cr or so; maintenance capex? ~20 Cr
12). Can we remove currency fluctuation effect - in CSM and show growth of business at $ level
We see 20 mn $ in Q1; 19 Mn $ in Q2 - so not much growth?
currency gain usually is pass thru; and 1st half is gen lower - for buying pattern of customers;given full year visibility - 30% growth will be there.
13). Please elaborate - why no orderbook growth? slowdown?
As mentioned before, this is strategic decision - due to aspect of balancing visibility in csm vs flexibility; give away flexibility of improvising product mix in future for larger potential molecules; need a balance
We believe orderbook of 320-325 Mn is fine for 1.5 years and new business discussion/visibility is strong; we are comfortable absolutely; and not keen to give away the flexibility
14.jambusar - full fledged next year - revenue size
)- should be doing close to 100 cr in jambusar next fy
15.Agri - next Rabi season outlook?
expected to be better
any idea on farmer economics improving?
over last 2 years; economics of farmer has been better; MSP improving support
Dom - growth in last season? came form which products?
)- mainly insecticide & herbicide;
And Rabi season?
Rabi expected to be generally good. All segments insecticides or fungicides should do good.but Rabi season crops usually doesn’t need much herbicide.
16). CSM next half how much?
close to 60-65 $mn next half csm.
17). Hedging policy?
hedging - go by net exposure; a certain %ge of this is hedged.
17). Why cash flows not improving - despite sale of a division last year
grishma shah - envision cap
cash flows - we are in expansion mode in exports business. 150 cr to realise the growth prospects; as these invests being made - so overall you may not see free cash flow growth; but if you see operating cash flows - we have registered growth
net working capital exposure has reduced despite 22% growth;inventory has gone up -for realising q3 and q4;d/e at 0.6 0.7 - should improve; as internal accruals will improve
18). Domestic vs last yr
dom -1h - 336 cr ; last year 295 cr
q1 - across industry prices were raised; 6-9%
19.Jambusar - how much time to peak utilisation
peak utilisation - 1 to 1.5 years
20). Pricing contract in csm?
currencvy n raw materail price change - pass through - in csm - the pricing mechanism is frozen when negotiating with the innovator ; depending on actuals it is looked at
21). Delayed monsoon effect ? how does it helP?
delayed monsoon -acreages in Q2 gone up; sowing will pick up; so demand for insecticides/herbicides also grows
22). Why orderbook not grown? slowdown globally in agro chemical molecules?
orderbook not grown. yes. But business growth - 63% growth last year; and this year 30% this year; so scale up is there in business; as mentioned befopregrowing orderbook decision or not is more strategic - as mentioned - for flexibility.but we are discussing new business which we see that will conclude and it will add to orderbook
23). Inventory breakup
inv - csm - close to 55% of csm and exports
24). Rabi outlook -already 1.5 months into season
still 2 early because of delayed monsoon; indications are positive
25). Capex done how much?
capex already done - 100 cr out of 150 cr for the year
fy15 - 30% plus growth in CSM business?
YES
Mahesh,
It will be better if you record and tie-up your reccos vs disclosures properly.
Frankly given your passion and the level of work that you put in, abrupt or u-turns in reccos/ positions is very confusing to normal readers like me.
2 quarters back - you had mentioned a comnplete exit from PI iundustries on this thread; you did not give any business reasons; said business fundamentals seem ok, but its your feel/instinct - And you exit completely?? from a level of full throated recommendation for almost a year?? Hard to understand for me.
And I dont seem to have read a recco from you again, Which said get back into PI again at these levels?So when di you make the BUY recco? approx timeframe/dates with levels please? and when did you make the last HOLD recco - agins dates/levels please.
only then can I view a BUY recco now from you Credibly. I am sure many other newbies wlike me will be completely consfused by these flip-flops as _ PI has remained in this narrow range eversince - 475- 500 range; nothing has changed in the business fundamentals to warrant these moves. Infact company has only consolidated, and maybe growing stronger.
We love your research but your credibility is suffering because of this flip-flops from your end. Or, are you saying you yourself have completely exited because of your gut feel. BUt you feel compelled to still recommend a BUY for the rest of us?Are you an analyst at some firm?
Sorry for being BLUNT - but I think you need to maintain discipline about proper disclosures which are understandable by all, especially as you give BUY/HOLD RECCOS?
)-----
inCY2013 in2H2011
Going through the concall details I think the company seems on track to achieve the expected 25-30% growth.
A big negative for me is the delay in jambusar csm facility start up. I think it has been delayed by almost a year or more.
Business model of PI Inds is good as once the CSM business starts kicking off, the vagaries of the agrichem side of business will be taken care of.
Based on current valuations (12.5-13 times fy 13 expected eps of 40) , I think upsides seem limited in short term. But for anyone convinced about the story and willing to hold for more than one year gradual accumulation seems to be a prudent course.
I dont hold the stock currently but it is under my watchlist.
Hi TCX,
don’t want to create any controversy again as in case of Relaxo and will request to kindly go through all posts in this thread in detail and then raise question on anyone’s credibility. Frankly speaking, as far as my efforts are genuine and I can answer my soul with confidence I am immune to what others think of me…
**
**
Research is a dynamic process and one needs to monitor each and every development closely and reassess our own expectations v/s actual factors delivered…If a person becomes static and refuses to change his view on a company even after the company doesn’t appear to deliver as per expectations then he can commit a great blunder…
**
**
Please find my repliesto your contentionin BOLD :
Your Contention
levels? So
**
My Reply to Your Contention
**
**
**
I am reproducing here my post in this thread dated February 23. 2012 :
"Completed my selling in PI…Have reduced my exposure considerably and now PI forms hardly one % of my core portfolio.
This is just for discl. purpose and it should not in anyway be taken as any negative for the company or its future prospects."
You see TCX I had bought PI Ind. in end-FY11 and took a very concentrated position at that time, post that it run-up 96 % within a span of just 1 year… so wasn’t I right in booking profits if factors doesn’t deliver as per my expectation (CSM plant was not commissioned as promised and order-book was not rising) ???..or, I should have not disclosed this fact that I have exited majority of my holdings ???
I am reproducing here my post datedFebruary 16. 2012 in this thread – my analysis post Q3FY12 concall :
"
So, now, revision in numbers are done; – next comes the key concerns for the company which have cropped up first time since 2009, the time from which company’s CSM business started scale-up and its Agri-Input segment registered tremendous growth each year YoY on the back of exceptional performance of Nominee Gold :
(a) The scale-up in CSM segment order book has peaked off since last two quarters and if such sluggish pace of addition continues for another two quarters the margin of safety reduces for the company.
(b) The revenue growth in Agri-Input segment as also the margins is so far driven mainly by Nominee Gold and just a slight sluggish performance of this product in Q2FY12 as also Q3FY12 seems to have a severe effect on margins of the segment.
(c) Company is expected to launch a blockbuster product similar to Nominee in Q1FY13 which will again call for significant investments on marketing side thereby affecting margins.
(d) Delay in commissioning of CSM plant ( first it was scheduled for Q3FY12 then postponed to Q1FY13 and now again postponed to Q2FY13 ) doesn’t augur well for the company as timely delivery is _**crucial for sensitive CSM contracts **_and any further delay could severely impact credibility of the company.
Having said all these does PI Industries merit a ‘Sell’ at current juncture. A clear NO mainly because of the business model company has as also the capable management team company posseses.
So, does it mean that PI Industries merits a ‘Buy’ at current juncture. Again a clear NO as this is the first time since 2009 ( the real year from which company’s journey towards growth started ) that company is facing many headwinds and it is extremely crucial to monitor each of the company’s developments very closely as it is only this stage from which many mid-cap companies falter to deliver. Next two quarters will be really crucial.
To conclude, PI Industries is at best a ‘Hold’ at current juncture as its historical trading band has been 15 times trailing earnings and 12 times forward earnings which gives us an actual price-band of Rs. 480â600 by taking FY12e numbers as trailing base and FY13e numbers as forward base. In absence of any significant corporate development, chances of any sort of rerating in historically commanded valuations are remote as company’s operational segments are facing many headwinds at present.
In case the monsoons don’t deliver in ensuing kharif season, it will severely impact PI Industries as major growth for Nominee Gold is dependent on kharif season. Without Nominee, PI can’t deliver on margins.
Similarly, the margin of safety in CSM segment has reduced considerably with its current order book being just 4.3 times FY12e CSM segment revenues down from 5.6 times then FY11 revenues at the end of FY11. Order-book is crucial for CSM segment as its a asset-heavy business and at any point of time order-book should not go below 3.5 times CSM segment expected revenues for company to remain in a comfortable position. As the scale of CSM segment is expected to increase from current Q4FY12 onwards it will call for a greater pace to addition in order-book and therefore next two quarters are going to be crucial for PI.
"
**
**
Did in my analysis or in my Feb.23 disclosure, I mention a complete exit in PI ??? No…all this while I have mentioned that this company is having great management and is one of the best run mid-cap companies of India…Its just that the factors turned out not as expected which merited downgrade to a Hold as it was likely to fall into a trading range for a quite a long time unless factors improve significantly…
**
**
I had initiated coverage on PI Ind. in end-FY11 (5th March 2011) at the rate of INR 580 (FV 10 = INR 290 of current FV 5) and published detailed research note on it at that time… now post that if the share price run-up too sharp and go beyond price-band of 15x TTM and 12x Forward and management is unable to deliver as promised as also macro factors doesn’t look favourable I reserve my right to change my view and downgrade it to a Hold…am I ???
**
**
Now, post that only recently in beginning November-2012 I have upgraded it to Buy from Hold earlier but didn’t put a detailed analysis with that post because its going to take atleast one-two weeks more to compile my analysis into words as when I publish something I need to be 100 % sure that the figures are 100 % accurate…Many members from valuepickr as also TED and ISG who mailed me for the reason of upgrade I promptly stated broad factors why I am upgrading PI to BUY…but with a caution that please cross-check the things as I am still collecting datas and feedbacks and not done with that…
Again coming to my post dated****February 16. 2012 in which I downgraded PI to Hold mentioning below the factors I mentioned at that time asto why I am downgrading it to Hold and the changes that have happened to mentioned factors right now…
**
**
**
Concern
**
(a) The_scale-up in CSM segment order book has peaked off_since last two quarters and if such sluggish pace of addition continues for another two quarters the margin of safety reduces for the company.
**
**
**
Status of this Concern Right Now
**
**
**
Management explained in detail that its not the order-flow that is peaking off but its the voluntary stoppage of intake of large orders to secure multi-year high-margin lucrative relationships which could catapult PI’s CSM segment into big league…new Jambusar facility is going to play a crucial role in this which has 5 times current CSM capacity…
**
**
**
Concern
**
(b) The revenue growth in Agri-Input segment as also the margins is so far driven mainly by Nominee Gold and just a_slight sluggish performance of this productin Q2FY12 as also Q3FY12 seems tohave a severe effect on margins_of the segment.
**
Status of this Concern Right Now
**
**
**
Company’s recent launch of Osheen and its product-line-up mitigates this risk…To state in slight detail,
Osheen belongs to neonicotinoid insecticides group which are proving to be most effective and therefore are projected to capture atleast 38 % marketshare (from current 26 % marketshare) of entire world insecticides sales by 2015 to become top best-selling insecticide group of the world…Neonicotinoid group itself is very concentrated one comprising of just seven molecules as of date…PI already has presence in imidacloprid (via Jumbo) - the largest selling neonicotinoid insecticide as well as the largest selling insecticide of world and thiamethoxam (via Maxima) - second largest selling neonicotinoid insecticide of world…now, with Osheen it has entered sixth largest selling neonicotinoid insecticide viz., Dinotefuran…In other words, now PI will have direct presence in 3 of the 7 neonicotinoid insecticides…
**
**
Dinotefuran will be directly pitched against the most effective insecticide against BPH (brown planthooper) of India, viz., buprofezin (Rallis’s Applaud)…In trials conducted before the launch, dinotefuran showed 90 % control of BPH v/s 20 % control of BPH in similar buprofezin treated plots…Now, as you are aware, via Nominee, PI has already reched 5 % of the total rice acreage of India (~2 mn. hec. = 4.9 mn. acres) …so, in effect it offers direct 320 cr. market only because of cross-selling of osheen to farmers who use Nominee (80 gms. dinotefuran required in 1 acre of crop – price for 80 gms. Osheen = ~INR 640 ) ; forget here the other untapped 95 % rice market…
**
**
Hence, Osheen is set to become 100 cr. + product for PI within a couple of years for sure inspite of the fact that Dinotefuran market in India will be shared between PI and Indofil as Indofil’s pricing is much higher than PI…
**
Concern
**
(c) Company is expected to launch a blockbuster product similar to Nominee in Q1FY13 which will again_call for significant investments_on marketing side thereby affecting margins.
**
Status of this Concern Right Now
**
Its already launched (OSHEEN) and expenses are well taken care of by maintaining margins…since the detail of the product was not known in Feb.2012, its cross-selling opportunity in PI’s key crop Rice was not known and today we have the knowledge that Osheen has good cross-selling opportunity for PI which can be done by minimal investments.
**
Concern
**
(d)Delay in commissioning of CSM plant( first it was scheduled for Q3FY12 then postponed to Q1FY13 and now again postponed to Q2FY13 ) doesn’t augur well for the company as timely delivery is_crucial for sensitive CSM contractsand any further delay could severelyimpact credibility of the company_.
**
Status of this Concern Right Now
**
**
**
Trial runs of this facility are already started and so the past will become past and the focus will turn to progress of this new facility…Its heartening to note that even 2nd phase of this facility is slated to be planned from 1HFY14 which will ensure sustained revenue growth for CSM business atleast for next 3-4 years…
**
**
====
As can be seen from above, since the concerns which were there for Pi’s downgrade seem abating, its prudent to upgrade it to Buy which I have done…
**
**
Feel free to get back to me in case of any query on PI or any company of company and company level only…
I would not like to create another discussion like Relaxo in this thread and request all members to concentrate on PI’s fundamental side rather than aspects like credibility and all…Please don’t follow me, I am just putting my best efforts for analysing a company and putting my analysis to words in my research notes…Its one’s own responsibility to put in efforts and cross check the facts by himself…We are here to discuss companies rather than debate on other issues and request members including TCX not to reply to this post of mine citing any other issue than pure company discussion. I am here to reply on all company-targeted queries.
**
**
Rgds.
Discl. : I am accumulating Pi Industries since October-mid and plan to continue buying till my target-quantities are bought.
Link to Edelweiss Report on PI Industries published today…Reiterates Buy with a price target of INR 624
http://www.scribd.com/doc/114419872
Rgds.
Hi Mahesh,
AFAIK, Edelweiss reports are not for public distribution. So my question is do you have the right to share it via scribd !!! … If not, then I think it is a better idea not to share such kind of stuff in public forum. By doing so you are putting yourself and the valuepickr in potentially difficult situations.
Regards,
-Subash
Link: http://www.scribd.com/doc/114419872
Rgds.
Hi Subash,
As far as my knowledge is concerned, anyone can subscribe for free to edel. research for 3 months and its also posted in publicly viewable groups…anyway, respecting your knowledge, will remove the report from my scribd account so the link will become immaterial…thanks for pointing this out…
Rgds.
**
**
**
**
Yes Hitesh…delay in Jambusar facility (which was delayed 3 times) was a major concern for me too (as highlighted in my Q3FY12 analysis note too)…but, since the trial runs have already commenced and production expected to start by Dec.'2012-Jan.2013, this concern should be put to rest as far as markets are concerned…
**
**
12 times forward and 15 times Trailing is the lowest trading range for a company like PI which has exhibited 25 % + RoE since last 4 years and is expected to generate similar RoE atleast in next two fiscals…hence, going into Q4FY13 when FY13 could become TTM and FY14 could come as forward numbers, and management guidance in recent concall of robust second half as well as FY14 for CSM segment , this company will be interesting to watch as far as pricing behaviour is concerned as a favourable kharif season (of 2013) can augur very well for PI…post 2010 when I started covering this company, this is only the second time I have felt that this company is on verge of significant rerating and let’s see how the things turn out in 2HFY13…
**
**
One caution though, as per market sources, 2.5 % equity is floating in the market waiting to be sold by Std.Chtd.PE who is mulling complete exit for its own profit booking purpose having made 3.5 times on its investments in PI in just 3 years…Its only post absorbing of this stake, that the real rerating of PI could happen…
**
**
Also interesting to watch will be the funding route for second phase of Jambusar facility as management has guided that it is currently negotiating for some big molecules winning which second phase will be commenced in 1HFY14…will another PE player make its way into PI or not will be interesting to observe…
Rgds.
**
**
**
**
Discl. : As disclosed in earlier post also,I am accumulating Pi Industries since October-mid and plan to continue buying till my target-quantities are bought so my views have to be taken in that regard.
Elara Capital, in its report published today, reiterated Buy on PI Ind. by revising upwards its Price Target to INR 720 from INR 637 earlier and making PI Ind. its top pick in Agri Input segment…Conclusion of the report reproduced below for members’ reference :
Upgrade TP to INR720, iterate PIIL astop pick in agri-inputs
Post results and incorporation of annual report numbers,we have marginally tweaked our FY13/14E estimates.Driven by favourable Rabi season (late showers, better
water reservoir levels and improved soil moisture) andlow base (weak H2FY12), we have upgraded our targetmultiple for the stock to 14x FY14E earnings (~25%
discount to Rallis India target multiple of 18x) andmaintain Buy on the stock with revised TP of INR720.
We also iterate PIIL as our top pick in agri-inputs spaceowing to stronger growth in domestic business(reflected in H1FY13 numbers), promising pipeline inFY14E (both in agri-inputs and CSM business), strong~30%+ growth in CSM business and ~30% earningsCAGR (excluding forex fluctuations) over FY12-14E.
Two Block deals of 1 lakh shares on NSE and 50 k shares on BSE happened today at 10.15 a.m. in PI Industries…with this 0.6 % equity already absorbed and only further 2 % equity (4.8 lac shares) remaining to get absorbed of Std.Chtd.PE…Rerating seems very near for this promising company…
Rgds.
Discl. : I am accumulating Pi Industries since October-mid and plan to continue buying till my target-quantities are bought so my views have to be taken in that regard.
PI Industries )- Board Meeting on Dec 06, 2012
PI Industries Ltd has informed BSE that a meeting of the Board of Directors of the Company will be held on December 06, 2012, inter alia, to consider raising of funds/ resources through equity / debt / equity related instruments with various Domestic / International options including QIP/ FCCBs/ ADRs/ GDRs/ FPO/ Optionally or Compulsorily Convertible Redeemable Preference Shares, etc., subject to approval of shareholders.
A sign of second round of funding is imminent in the agenda of the said board meet…its heartening to see that second phase of Jambusar facility which was likely to be planned from Q1FY14 is planned from Q3FY13 itself…an indication that negotiations for some big patented molecules which were going on since last many months have concluded and arrangement is getting finalised…or, any acquistion could be coming through although its less likely as management has to focus on potential opportunity CSM segment provides…if any PE player makes an entry into PI for second round of funding it will be great news for the shareholders…
In any case this is a great opportunity to invest in closely held company which we normally get only in unlisted space…with just 6.98 % public holding, its almost a PE-play because of which we find entities like Sequoia, JP Morgan and Citigroup each holding more than 4 % equity in the company…since these entities have purchased at near current market rate or at a premium (Citigroup recently bought 4.4 % equity at INR 570 which is 6 % premium to CMP), it limits downsides considerably while at the same time providing ample upsides for minority shareholders…in case of any adversities promoters with 63.35 % stake and PE-FIIs with 22.86 % stake loose substantially than minority shareholders which is an environment any prudent investor loves to invest in…
Management is focussing on next phase of growth in the form of phasewise execution of Jambusar facility which has the potential to generate 5 times current CSM revenues…Management quality and credibility is unquestionable and its execution skills are most efficient which will see the company reach greater hights in the times to come…
Discl.- PI Industries forms part of my core portfolio and my views have to be taken in that regard.
Two Block deals of 1.30 lakh shares on NSE and 1.82 lakh shares on BSE happened today at 12:29 p.m. in PI Industries…with this 1.24 % equity further absorbed and only another 0.76 % equity (1.7 lac shares) remaining to get absorbed of Std.Chtd.PE…Rerating seems very near for this promising company…
Rgds.
My Reply to query on PI…
What is your expected FY. 14 & 15). EPS ?[/QUOTE]
Hi ****,
The expected numbers also depend largely on monsoons on which domestic agri input segment of PI depends heavily…so, will provide you numbers in both the cases, in case the monsoons deliver as expected and in case they falter as they have done this year…
Taking worst scenario first…asto for both FY14 and FY15 monsoons doesn’t turn out good…then the numbers could be as follows :
For 2HFY13 (Rabi), I am assuming a meagre 8.5 % growth YoY in Agri Input segment of PI although Rabi is turning out well on ground as per the feedbacks gained so far…
So, for 2HFY13, Agri Input segment should see a revenue of 224 cr. and CSM segment, for which USD 62-65 mn. orders are likely to be executed in 2HFY13, CSM segment should atleast see a revenue of 304 cr…
Hence, on whole FY13 basis, at consolidated level, PI should see a revenue of 1064 cr. with EBITDA of atleast 186 cr. and PAT of 103 cr. which translates to FY13 EPS of INR 41.03…
For FY14, in case the monsoons turn out bad as they have done this year then PI’s Agri-Input segment should grow by ~10 % to register revenues of INR 615 cr.
For CSM segment, in FY14, new facility will atleast operate at 35-40 % utilisation since the orders are already tied…hence, new facility should report revenues of ~120 cr. and old facilities should report revenues of atleast 485 cr. which makes the combined revenues of CSM segment for FY14 at 605 cr.
Hence, on consolidated basis, for FY14 PI should report revenues of atleast 1220 cr. in worst scenario (monssons failing) with EBITDA of atleast 207 cr. and PAT of 122 cr. which translates to FY14 EPS of INR 48.6 on worst come to worse basis…
For FY15, again if monsoons turn out bad, then PI’s agri-input segment should grow by only 10 % and report revenues of of ~675 cr.
CSM segment’s revenue growth for FY15 should be exceptional, because, new Jambusar facility should operate at atleast 70-75 % utilisation which will take the revenue from new facility at 280 cr. and old facilities should turn out atleast 540 cr. revnues to take the total revenues for CSM segment at 820 cr. for FY15.
Hence, for FY15, in worst case basis, PI should report consolidated revenues of 1495 cr. with EBITDA of 263 cr. and PAT of 164 cr. which translates to FY15 EPS of INR 65.3.
Now, considering the good scenario, which is most likely atleast for one of the two fiscalsif not both, FY14 & FY15… wherein monsoons will turn out good…
FY13 estimate will remain as it is, at consolidated level, PI should see a revenue of 1064 cr. with EBITDA of atleast 186 cr. and PAT of 103 cr. which translates to FY13 EPS of INR 41.03…
For FY14, in case the monsoons turn out good then PI’s Agri-Input segment should grow by atleast ~22 % as Nominee and Osheen will both contribute to growth to register revenues of INR 684 cr.
CSM segment’s FY14 estimates will remain same as above, with revenue at 605 cr.
Hence, on consolidated basis, in case of good monsoons, for FY14 PI should report revenues of atleast 1289 cr.with EBITDA of atleast 218 cr. and PAT of 127 cr. which translates to FY14 EPS of INR 50.6.
For FY15, again if monsoons turn out good, then PI’s agri-input segment should grow by atleast 18 % and report revenues of of ~807 cr.
CSM segment’s estimates for FY15 will remain same with revenues of 820 cr…
Hence, for FY15, in good scenario, PI should report consolidated revenues of 1627 cr. with EBITDA of 284 cr. and PAT of 176 cr. which translates to FY15 EPS of INR 70.1.
Having said all things above, these are just ballpark figures and have significant room for postive triggers as you very well know that board meet is scheduled for 6th dec. wherein fund-raising is to be considered…In all probability, company will be planning for funding of second phase of new CSM Jambusar facility which if gets operational in FY14 could very well take the revenues of high margin CSM segment to 4 digit figure in FY15…This new Jambusar facility has the potential to generate 5 times current CSM revenues and therefore is likely to move the company into next orbit of growth…
IF PE fund’s entry happens at CMP then it will bring a lot of discipline to already capable management of PI and will help in rerating the company very fast…
I maintain my view that Pi is one of the safest investment opportunity available in current markets which has limited downsides but significant upsides…
Feel free to get back to me in case of any query.
Rgds.
Discl.- I have PI as part of my core portfoilio and so my views have to be taken in that regard.
My Reply to Query on PI of one knowledgeable member…
Hi Mahesh,
I have been following this company for the past couple fo years and met the management few times. Its part of my portfolio and have been one of the disappointing stock performances. After the current conf call my worry is that their order book has not moved from the $320 mil range since i have been tracking. Given this how would they grow the CS business?
[/QUOTE]
Hi ***,
Your concern is genuine and that was exactly one of my main concern too which prompted me to downgrade the stock to Hold in Feb’2012 post Q3FY12 results…it will be great if you can refer my earlier posts on the company…
However, over last 3 months or so management has explained in quite detail why this order-book is remaining stagnant since last one year…Its a voluntary decision on part of the company and they are refusing to accept orders and increase visibility of CSM business beyond two years…
The reason of this being – they see some huge patented molecules deals coming their way which could fully utilise the new Jambusar facility at exceptionally high margins…Such deals are likely to be multi-year arrangements which will improve visibility of CSM segment considerably and will establish huge credibility of PI in world landscape which will enable it to get recognised as a complex chemistry expert…
In management words they want “to remain flexible enough to negotiate deals in such a way that they go into company’s favour” from a long term point of view. If they continue increasing order-book and book entirely the new Jambusar CSM facility which has the potential to generate five times current CSM segment revenues, then although it will increase the visibility of CSM segment but will also devoid the company of flexibility to secure lucrative deals in future which could catapult PI’s CSM segment into big league…To be associated with innovators in their most complex and huge projects is what is the vision of the company and this can be done only when facility and capacity is ready to be shown to innovators…
Management had clearly indicated that only when such arrangements near finalisation will they be going for next round of expansion at new Jambusar facility (second phase) and will be raising funds for that…tommorrow’s board meet to pass an enabling resolution for raising funds could be a precursor to this move and indicate that arrangements are on verge of finalisation…Its when these arrangements are finalised, you will see a jump in order-book as these will be huge deals…So, by March’2013 you should see significant ramp-up in order-book of CSM segment…
Another point to note, which management had explained was, PI’s CSM order-book is actually under-stated…Around 40% of its CSM revenue is viaannual contracts and because PI is either the sole or second supplier, a major portion ofthis revenue recurs every year. The balance 60% revenue is from long-term contractsexecutable over three to four years. The company includes only those ordersexecutable over three-four years in its order book, which understates its total order bookposition.
Hence, whether you see it from any angle, CSM segment of PI is a niche segment and is a real feather in company’s cap and has great revenue visibility with expanding margins for many years which is rare to find in many businesses atpresent…
Tomorrow’s board meet outcome and language of notice for seeking shareholders’ approval for the same will be interesting to watch…as said before, there are only two possibilities,-----one, eihter some acquisition is coming through which will provide good impetus to agri-input segment of PI as company is scouting for acquisition in hybrid seeds space for quite a long time…or second, arrangement with innovators are finalised because of which second phase of Jambusar facility will be initiated which will provide good visibility and sustainability of growth to PI’s CSM segment…
Feel free to get back to me in case of any further query.
Rgds.
As per Bulk Deals data of yesterday of both the exchanges, Std.Chtd.PE has sold further 3.53 lakh shares of PI at ~INR 530…with this only ~1.25 lakh shares remaining to be sold of Std.CHtd.PE…
Rgds.