Custom Synthesis (CSM) -
- Has been doing ~25 molecules at present at the commercial scale.
- Has commercialized 4 new molecules in FY18.
- Planning to commercialize 2-3 new molecules in FY19, of which one has already been commercialized in 2QFY19.
- The volumes of these new molecules is expected to ramp up in FY20.
- Order book of CSM business stood at US$ 1.15bn in 1QFY19; executable over the period of 3-4 years.
- Top 30% molecules contribute 70% of the order book.
Capacity -
- Currently operating its plants at a ~90-95% capacity utilization.
- Fresh capacity in Jambusar (i.e. two new plants IV & V) is expected to come on stream from Dec '18 and Jan '19.
- One new plant is for agro chemical and another for new chemistry (early intermediary in Pharmaceutical sector).
R&D pipeline -
- 70 products in R&D pipeline at FY18 end.
- Sharp jump from some 30-35 products in pipeline earlier.
- Includes Fine chemicals and Electronic chemical products in addition to usual Agro-chem products.
Domestic agri-inputs -
- PI currently has 65-70% market share in the Bispyribac sodium market, through its brand Nominee Gold. Bispyribac Sodium’s market size has grown by around 43% YoY to ~1,000KL . Over the next two years, it is expected to grow at a CAGR of ~40%+ to reach ~2,000KL, largely led by deeper penetration. The price has corrected by ~15-20% from its peak due to generic competition. Management expects the pricing delta between PI and generic players to remain stable going forward. PI has applied for the registration; expecting registration anytime now. Post it will start producing Bispyribac sodium in India.
- Osheen, a broad spectrum insecticide (launched in FY13) continues to be a blockbuster product for PI Industries and it has been growing at a CAGR of 80%+ over the last two years as the co expands its offering to multiple crops. Management expects Osheen growth to continue in the range of 35-40% till FY20 and expect to return to stable growth of 15-20% from FY21 onwards.
- Co has a strong domestic product pipeline lined up till FY22 and it has planned to launch 4-5 new products every year.
- In FY18, the co has launched five co-marketed products (Fender, Header, Visma, Elite and Humesol) and management has highlighted some of the products have grown more than 100% in the current season.
- PI has planned to launch 4 new co-marketed products in FY19, of which two products were already launched in the 2QFY19.
Guidance -
- Expecting 18%+ kind of growth in FY19.
- 45-55% broad split between 1H and 2H.
- Expecting 20-21% OPM for FY19.
- Around 21% tax rate in FY19 (was much lower in FY17 because of 100% abatement available then).
Source: Management meet note (here) and earnings conf call transcript (here and here).
PI Industries’ Q2 & H1 FY19 Earnings Conference Call is schedule on Monday, Oct 29, 2018 at 11:00 a.m. IST (Dial-in details here).