Nirmal Bang maintains its "Buy" call on PI Industries Limited for a 24% potential upside from its current level with a target price of Rs 4,213 per share. PI Industries is a mid cap Chemical sector stock. It has a market cap of Rs 51,917.18 crore. It is an agri-sciences company with a strong presence in the both domestic and export market. The company has three manufacturing sites in Gujarat and an R&D centre in Udaipur.
Stock Outlook & Returns on investment
On NSE, the stock of PI Industries last traded at Rs 3,421.95 per share, 1.12% up from its previous close. The stock is trading near its 52-week high, 7.48% down from high level. Its 52-week high level is Rs 3,698.45 and 52-week low is Rs 2,333.55. It has given 2.87% in 1 week, 6.5% in 1 month, and 1.35% in 3 years, respectively. Over the past 1 year, it has given 16.67% positive returns on investments. In the past 3 years, it has given 130.77% multibagger returns, and in the past 5 years, it has given 263.01% multibagger returns.
NBIE conference - PI sounded positive despite challenges, buy for target Price Rs 3,384
The brokerage has said, "We hosted a group investor meeting on Friday (25th Nov'22) at NBIE's virtual investor conference with PI Industries Ltd (PI Ind) management, led by Mr. Rajnish Sarna, Joint Managing Director and Mr. Manikantan Viswanathan, Chief Financial Officer. PI Ind management sounded positive about the prospects for CSM and the domestic CPC business while asserting that it is actively pursuing a buyout in Pharma CSM space in India/overseas that is a strategic fit. The company has two targets in sight, but admitted that such assets are scarce and entail premium valuations. The management is also aiming at a 2-year timeline to integrate and scale up returns post takeover of a Pharma/CDMO asset through M&A. The company also highlighted PI Ind's robust product pipeline, its thrust on developing innovative technology/digitization and the ESG focus.,
It added, "We maintain our BUY rating on PI Ind with a target price (TP) of Rs4,213, using a P/E of 36x on Sept'24E EPS to value its core CSM/domestic CPC business."
(i) CSM order book raised by 28% to US$1.8bn in 2QFY23 concall, which translates into 3-4 years of revenue visibility.
(ii) Beat in 2QFY23 EBITDA margin was based on scale/efficiency gains and improved asset turn on investments made in new capacity, technology, process improvement and higher volume.
(iii) Domestic revenue (27.8% of revenue) saw a beat of 15% in 2QFY23 - likely to sustain healthy outlook, especially in Horticulture subsidiary Jivagro Ltd on the back of new launches done in the past and fresh launches planned in 2HFY23.
(iv) Overall revenue growth guidance of 20%+ and the stock trades at 28.9x Sept'24E with 24% EPS CAGR over FY23E-FY25E.
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