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Geojit Bets On This Multibagger Mid Cap Stock For Robust Gains, Buy For Rs 3,860 Target Price

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Leading brokerage firm Geojit has placed a buy call on PI Industries Limited with a target price of Rs 3,860 per share. The stock is likely to jump 15% from its current level considering the given target price.

 

PI Industries is a mid-cap Pesticides & Agrochemical company having a market cap of Rs 51,342.17 crore. The company manufactures plant protection & specialty plant nutrient products and solutions under its agri-inputs business. It is also a leading custom synthesis (CSM) company in India providing contract research and contract manufacturing services to global innovators.

Stock Outlook & Returns

Stock Outlook & Returns

The current market price (CMP) of the PI Industries stock is Rs 3,374.05 per share. The stock recorded its fresh 52 week high on 09 November 2022 at Rs 3,698.45, and the 52 week low at Rs 2,333.35 on 27 January 2022, respectively.
The stock has given 2.58% in the past 1 week and 8.28% in the past 1 month, respectively. Over the past 1 year, the stock has given 12.88% positive return. It has given 141.55% multibagger returns in the past 3 years. In the past 5 years, it has given a 288.59% multibagger return.

Volume growth in both export and domestic segments
 

Volume growth in both export and domestic segments

PI Industries reported robust revenue growth of 30.8% YoY (13.3% QoQ) in Q2FY23 to Rs. 1,696cr driven by volume growth & price hike in both export & domestic segments. Export revenue grew 29% YoY led by 25% volume growth of its existing products and 4% YoY led by favourable prices and currency impact. Domestic revenue rose by 36% YoY led by volume growth of 31% YoY supported by a strong kharif season and newly launched products and a price increase of ~5%. EBITDA rose 50.9% YoY (23.0% QoQ) to Rs 423cr in Q2FY23. EBITDA margins rose 340bps YoY to 25.0% as the company was able to control fixed overheads and pass on costs through price hikes. Gross profit margins expanded sequentially by 180bps from 43.7% in Q1FY23 to 45.5% in Q2FY23. Reported PAT jumped 47.5% YoY to Rs 327cr.

Key concall highlights

Key concall highlights

• PI focuses on newer products and has 17 products in the pipeline in the next four to five years that are currently at various stages of approval.
• CSM export order book increased by USD 400m to USD1.8bn.
• CSM export company plans to commercialise 6 new products in the second half of FY23.
• In Q2FY23, 20%+ revenue was generated from a new innovative Agri brand.

 

Additional capex plans to meet its order book

Additional capex plans to meet its order book

The company continues to focus on improving its balance sheet in FY23. Capex of Rs 120.4cr in 1H23 is in line with company guidance. Management expects capex to reach Rs 700cr in FY23 to meet its order book. PI's net worth rose to Rs 6,617.6cr. It maintained higher inventory levels of Rs. 1,609.5 cr to meet customer supply schedules and avert supply chain disruptions. Trade working capital increased by 8 days i.e., 103 to 111 in 1HFY23.

Valuation

Valuation

Geojit said, "We expect volume growth to continue in the upcoming quarter in both domestic and export segments which will boost its topline. The company plans to pass on rising raw material costs through price increases. We expect the positive momentum to continue with a strong order book and new innovative products in the pipeline. Hence, we reiterate our BUY rating on the stock with a revised target price of Rs. 3,860 based on 45x FY24E adj. EPS."

Disclaimer

Disclaimer

The stock has been picked from the brokerage report of Geojit. Greynium Information Technologies, the Author, and the respective Brokerage house are not liable for any losses caused as a result of decisions based on the article. Goodreturns.in advises users to check with certified experts before making any investment decision.

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