PI Industries - Superior Business Model


Kumiai outlook on Pyro

In a much awaited results of this season Kumiai has disclosed results. It has not yet provided outlook on Axeev, however Kumiai guides for meagre 2.7% YoY growth in its Agricultural Chemicals sales for 2024 (registered 15.2% YoY growth in 2023 after guiding for 21% growth initially). Though it anticipates increase in Axeev (Pyroxasulfone) sales, it has guided for inventory adjustments of Axeev in some of sales countries. Further, it guides for price adjustments in Axeev as a countermeasure against generic products.

More importantly, it has guided for 15% decline in operating profits for 2024. Operating profits rose 11% in 2023 (earlier guidance stood at 35% growth).

Disclaimer: not invested.

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Wondering why Market not convinced with their clarifications yet…what confidentiality deters them from revealing the molecule’s share? Is this breakup available in their AR?

I think the market was waiting for clarification from Kumiai and there appears to be near term headwinds associated with Pyroxasulfone.

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Given the company’s history, from a long term pov yes i think so even though we need more clarity in the short term.

Disc : Invested and added more recently

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PI Industries Q3 Results Summary

Here are some additional key financial highlights I noted from the PI Industries Q3 FY2023 financial results:


  • Total revenue grew by 10% y-o-y to Rs 17,862 million in Q3 FY23
  • Revenue growth driven by 8% growth in revenues from operations and higher other income
  • Growth indicates steady business performance amidst challenging macro environment


  • EBIDTA grew by 30% y-o-y to Rs 6,071 million in Q3
  • EBIDTA margin expanded by 250 basis points to 34%
  • Profit before tax up 36% y-o-y, reflecting robust growth in profitability


  • Total expenses contained at 12% of revenues compared to 13% in Q3 FY2022
  • Raw material costs as a % of revenues has reduced indicating easing input costs
  • Higher operating leverage supporting profit growth


  • Company has large cash, liquid funds & fixed deposits of around Rs 19,500 Cr, primarily from past fundraise
  • Supports investment ability for inorganic growth opportunities
  • Interim dividend of Rs 6/share declared reflecting healthy cash generation

Segment Performance

  • Agrochemicals business continues to dominate - accounts for 98% of Q3 revenues & profits
  • Pharma remains small at 7% revenue share in Q3

Profit Growth:

  • Profit before tax for Q3 FY2023 was Rs 5,454 million, reflecting a 36% year-over-year growth compared to Q3 FY2022
  • This indicates that PI Industries has been able to deliver consistent and healthy profit growth in recent quarters

EPS Growth:

  • Basic EPS for Q3 FY2023 was Rs 32.04, reflecting a year-over-year growth of 38% compared to Q3 FY2022 EPS of Rs 23.24
  • Diluted EPS showed a similar 38% y-o-y growth from Rs 23.24 in Q3 FY2022 to Rs 32.04 in Q3 FY2023

So in summary, over the last year, PI Industries has delivered:

  • Strong double-digit profit growth of 36% y-o-y
  • Robust EPS growth of 38% on both basic and diluted basis

Overall the results portray solid operating performance by PI Industries across metrics in a challenging environment. Growth, margins and cash flows remain healthy.


With such a robust result, share price should have been at more higher that what it is. Some disconnect , it seems

Uncertainty regarding pyroxasulfone still exists in the minds of investors.

  • Overhang of one molecule
  • Long term journey
  • Different motivations in the world where every other stock gives FOMO to true long term investors.
  • Rest one molecule concentration is real so either u want to live with that and just wait for the management to deliver or just choose some other businesses.
  • Pharma is now 10 perc of export volume.

PI industries. My 2cents.


Q3 FY24 Conference call main points

The incremental growth (60℅) registered in this quarter has come from new molecules which has been developed ovr last 2-3 years.

Pyroxasulfone has gone generic in few countries and 10-15℅ price cut has been observed till now. It is going to go generic in other developed countries as well over the years.

The innovator for which PI is supplying this pyroxasulfone has got some extended patent registration for the formulation/combination making out of pyroxasulfone and this would in a way protects innovator and PI ultimately from the risk of pricing erosion.

PI has got 25-30 molecules in CSM buisness and so is pretty diversified in terms of overall product and revenue mix.

Some seasonality element on the dometic agri business side this quarter, management expects performance to improve and they have got quite a few branded products which they continue to market.

No guidance given by management for FY25, they would give it in Q4, reasonably confident of achieving 18-20℅ growth in overall business this year.

Recovered amount from the one off element is to the tune of 700mn.

Continue to work towards pharma, mainly towards improving infrastructure deploying resources and other development.

Pharma business to have similar margins as PI overall agri business margins (24-26℅).

Aspire to take pharma business to the 25℅ of overall revenue of PI in the coming 4-5 years.


Surplush cash is around 2800 or is it 19500 crore? Apology if i missed something

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Surplus cash is Rs. 32,926 million. Refer page 6 result press release.

1794b76c-4997-4ff5-8be2-9da64b0d0fbd.pdf (3.8 MB)


Correct cash is 3292 crore, not 19,500 crores

" * Company has large cash, liquid funds & fixed deposits of around Rs 19,500 Cr, primarily from past fundraise".


PI continues delivering extraordinary results, given the pain across the agchem sector. Sales grew by 17.6%. and EPS by 27.5%. New products are driving near term growth and they continue investing in longer term growth drivers (electronic chemicals, pharma, process efficiency). Concall notes below.


  • PI now in top 3 agchem CSM companies globally, their results are superior to peers due to focus on early stage patented

  • 60%+ growth in Q3 was from new products (commercialized in last 3 years) - agchem CSM grew by 13%

  • One time higher 3% higher EBITDA margins due to recovery of theft material (41 cr. inventory, sale price was 70 cr.; 41% gross margins)

  • Sustainable EBITDA margin is 25-26%

  • Non-agchem should contribute 20-25% revenues in 4-5 years

  • 9MFY24 Capex : 900 cr. including pharma acquired assets of 497 cr. Will continue incurring 600-800 cr. organic capex (expected asset turns: 2-2.25x)

  • Pyroxasulfone : formulation has seen 10-15% price erosion (not technical). Formulation market size is $600-700mn

  • R&D

    • Pipeline : 50 new molecules

    • Nonagchem share in new enquiries have grown to 30%

    • 800+ scientists, filed 155 patents

  • Domestic

    • Launches : 5 in 9MFY24 (CLARET for paddy, patented herbicide EKETSU for rice, fungicide KADETT for soyabean and groundnut, Bio-fungicide PIILIN for grapes and Chili)

    • Focused on product mix rather than volumes

    • Biological and bionutrients : Portfolio of 8 products, 2 are entrenched over 2 decades. Launched a new brand AMINOGROW

Disclosure: Invested (position size here, bought shares in last-30 days)


A good article to get overview

Stock price did not catch up with profit growth in last 3 years, so I expect an up move some time and holding patiently.

Disc: Holding 4% of PF


Thanks for sharing the article.

On the stock price catching up with with profit growth, I feel it is the other way round. in the last 3 years, profits have caught up with share price.

Market is currently uncertain about their dependency on one product, competition coming in this area and destocking of agro chem globally. Some one on twitter mentioned about a report from JM Financial where they mentioned going forward things will get harder for PI as competitive intensity will increase. I could not find the report though.

Management has always been conservative in their projections. They are good capital allocators and continue to enhance their technical capabilities by adding more scientists/PhDs, their relationships with clients are sticky, they have stayed away from commodity chemicals. Optionality of Pharma CMS is yet to add meaningfully to topline and bottom line.

With a right to go wrong, my view is that it one of those where a positive surprise against market perception can give a good upside to stock price.

Disc - one of my top 3 holdings.