Decent set of numbers from PI given the inventory build up and competition coming in key products. In the investor presentation, management has guided 15% growth, reducing from 18-20% being mentioned earlier. Looks like there will be slower growth for the next few quarters, need to wait for the con call tomorrow to get further details.
disc- invested and remains one of my top 3 holdings
As per PPT - https://www.bseindia.com/xml-data/corpfiling/AttachLive/f0ce5213-df5c-4d98-a57e-6c840b6364ab.pdf
Slide 17 - targeting to achieve ~15% revenue growth with sustained improvement in profits.
On congervative if we consider 15% revenue growth with same profit margin of 22%, EPS of FY 25 is 127.6, with that EPS forward PE comes to 28. Seems cheap with PI quality.
Disc: Invested and views are biased.
Over the last 6 years promotors have reduced stake from 51.35% to 46.09%. Going below 50% ownership does not instill faith. Did management provide any commentary on this?
Is it due to promoter’s selling?
No, mainly it is due to QIP that company done for fund raising.
PI had a softer quarter, with sales growing by 11% and EPS by 32%. They are guiding for 15% sales growth in FY25 with similar margins but higher tax rates which might keep EPS muted in FY25. Besides that, they have grown very well in this downturn and have clearly differentiated themselves from other agchem/chemical cos. Concall notes below.
FY24Q4
Targeting 15% sales growth in FY25 and higher growth (18-20%) starting FY26; 49-50% gross margins and 26% EBITDA margins
70% of CSM growth in FY24 came from new molecules commercialized in past 3-years
New products: 7 (domestic), 6 (CSM); 8-10 in CSM in FY25
6% revenue drop in domestic agchem in FY24 (29% growth in biologicals)
Higher tax rate in FY25 (24%)
Weaker pharma revenues due to deferral of customer orders (315 cr. vs 563 cr. In FY23). Investments will happen for the next 1.5 years after which EBITDA margins will increase
FY24 capex : 1080 cr. (including 490 cr. for pharma acquisition); Plan 800 cr. In FY25
Order book increases to $1.75bn
Disclosure: Invested (position size here, no transactions in last-30 days)
PI Industries (PI) has built a solid business model. It has strengthened its presence in the Custom Synthesis Manufacturing (CSM) segment within the agrochemical industry. Going ahead, the company aims to diversify into the pharmaceutical segment and other niche chemistry. It continues to build a strong domestic agrochemical franchise by launching improved products in the crops and pesticide segments over the years.
PI Industries’ focus on CSM export has been the key differentiator from other agrochemical and chemical players in India.
From FY14-24, the company has an industry-beating track record of:
PI’s moat (i.e. the ability to maintain a competitive edge over its competitors) lies in its strong export-focused CSM business. No other Indian player offers the width and consistency that PI does. The company leverages this by consistently launching new molecules.
In 2023, the company ventured into:
through the acquisition of Therachem Research Medilab, LLC and Archimica SpA.
Despite a ₹70 crore PBT loss in its pharma segment, PI Industries reported an EBITDA margin of around 28% for the quarter. The company reaffirmed its goal of achieving a 50% to 51% gross margin and a 25% to 26% EBITDA margin for the year. Considering that quarter-to-quarter variations are expected due to changes in product mix and supply schedules.
On the domestic front, the company continues to provide farmers with advanced crop protection solutions with a steady flow of new products.
In Q1FY25, it launched two innovative brands:
With over 20 products in its pipeline for domestic launches, PI Industries is expecting a healthy visibility of growth in the coming year.
It formed a strategic alliance with Koppert to innovate in the Agricultural Biologicals domain. Biologicals revenue grew by 39% year-on-year, supported by a favourable product mix and operating leverage.
What do you think about this?
