Dolat Capital recommended accumulate rating on PI Industries with a target price of Rs 2315 in its research report dated August 07, 2020.
Dolat Capital’s research report on PI Industries
The company reported a consolidated sales growth of 40.6% YoY to Rs 10.6bn. A seasonally strong quarter for the domestic business coupled with a 23% YoY growth in exports augured well PI Industries. Hiccups on gross-margin came in largely due to business mix coming into play as IS-AGRO Asia’s numbers are a part of the consolidated entity – which typically has lower gross margins than PI’s existing product base. Contraction of 280 bps YoY to 42.0%, was offset by cost optimisation measures. Other expenses grew only by 8.2% YoY to Rs 1.17bn, which helped in deriving operating leverage. EBITDA thus grew by 50.3% YoY to Rs 2.29bn. Depreciation inched up by 44.7% YoY to Rs 427mn, while interest costs too went north by 317.4% YoY to Rs 96mn. However, had little impact on profitability with PAT growth of 43.2% YoY to Rs 1.45bn.
We like PI Industries moat in agro-chemicals and contract manufacturing and value PI Industries at 45.0x FY22E EPS of Rs 51.5, and revise our target price and rating to Rs 2,315/share, Accumulate.
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First Published on Aug 9, 2020 09:16 pm