MOSL: PI INDUSTRIES (Buy)-Expect back-ended revival in growth; Margins likely to remain contained though
PI Industries: Expect back-ended revival in growth; Margins likely to remain contained though
(PI IN, Mkt Cap USD1.5b, CMP INR766, TP INR889, 16% Upside, Buy)
- Results below expectations; margin contracts 410bp: PI's revenue increased 9.5% YoY to INR6,056m (est. of INR6,488m) in 1QFY19. EBITDA margin contracted 410bp YoY to 19.5% (est. of 24%) due to a rise of 410bp in raw material cost to 53.4% of net sales (est. of 49.4%) and continued investments in R&D. EBITDA declined 9% YoY to INR1,181m (est. of INR1,557m). Adj. PAT declined 18.4% YoY to INR817m (est. INR1,165m) due to a higher tax rate of 21.9% v/s 17.9% in the year-ago period.
- Strong order book and new product launches to drive growth: PI witnessed robust growth of 23% in the domestic business and healthy execution of order book in the CSM business. Moreover, the order book remains strong at USD1.1b, with the execution getting replaced by new orders. Management guided for 18-20% revenue growth in FY19, backed by its active marketing strategy and product launches. The pipeline entails four products for the domestic market and 2-3 products for the CSM business.
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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