MOSL: PI INDUSTRIES (Buy)-Demand revival in full swing-Momentum in exports – the key growth driver
PI Industries: Demand revival in full swing; Momentum in exports – the key growth driver
(PI IN, Mkt Cap USD2.2b, CMP INR1105, TP INR1266, 15% Upside, Buy)
- Revenue beat; EBITDA/PAT in line: 4QFY19 revenue increased 29% YoY to INR8b (our est. INR7.5b) with EBITDA up 28% YoY to INR1.7b (in-line). EBITDA margins contracted 10bp YoY to 21.4% (our est. 22.8%), while Adj. PAT increased 18% YoY to INR1.2b (in-line). For FY19, revenue/EBITDA/adj. PAT grew 25%/17%/12% YoY to INR28.4b/INR5.7b/INR4.1b.
- Additional export capacities/domestic launches to support growth: 4QFY19 CSM business grew 39% YoY (+29% YoY in FY19) aided by increasing export momentum. Growth in the domestic business was muted at 4% YoY (+17% YoY in FY19) owing to subdued uptake post mild winter season. We expect growth in FY20 to be largely driven by the CSM business (+22% YoY) on the back of easing global inventories, new capacities (one plant commissioned in Feb’19, another expected by 1QFY20), and 3-4 new launches. Domestic business should grow 16% YoY in FY20 aided by ramp-up in recent launches and healthy new product launch pipeline (2-3 launches expected in FY20).
- Concall takeaways: (i) PI has guided for 20-22% revenue growth in FY20 with margin expansion of 50-100bp. (ii) It has raised capex guidance for FY20 to INR4-4.5b from earlier INR3-3.5b, considering strong order visibility. (iii) Order book stood at USD1.35b (USD1.3b in 3QFY19 and USD1.2b in 4QFY18).
PI Industries Limited is a holding company. The Company is engaged in the manufacturing and distribution of agro chemicals. Its geographical segments include Sales within India and Sales outside India. The Company manufactures agrochemicals, plant nutrients and plant protection, specialty fertilizers and hybrid seeds. It offers insecticides under various brands, including LEPIDO, DODGER, COLT, OSHEEN, COLFOS, FOSMITE, JUMBO, FORATOX, CARINA, MAXIMA and VIBRANT. The Company offers fungicides under brands, which include CUPRINA, LURIT, KITAZIN, SANIPEB, CLUTCH and LOGIK. It offers herbicides under the brands, including SOLARO, NOMINEE GOLD, INRO, BINGO, PIMIX, BUNKER and MELSA. Its specialty products include BIOVITA Granules and BIOVITA Liquid. The Company provides services in various areas, including contract research, process development, analytical method development, process safety data generation and process detailed engineering.
Motilal Oswal Financial Services Ltd. is a reputed name in Financial Services and Online Trading with group companies providing services such as Private Wealth Management, Retail Broking and Distribution, Institutional Broking, Asset Management, Investment Banking, Private Equity, Commodity Broking, Currency Broking, Principal Strategies & Home Finance.
Motilal Oswal Securities is a group company of Motilal Oswal Financial Service Limited which started as a stock trading company and has blossomed into well diversified firm offering a range of financial products and services. Motilal Oswal has built a reputation as the source for best stock trading company and this has taken a wealth of experience, knowledge and expertise, constantly working in tandem, over the years.
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