MOSL: PI INDUSTRIES (Buy)-Healthy volume offtake drives performance
PI Industries: Healthy volume offtake drives performance; Optimism on momentum stems from the robust pipeline
(PI IN, Mkt Cap USD1.4b, CMP INR732, TP INR860, 18% Upside, Buy)
- Revenue exceeds estimates, profitability in line: PI’s revenue increased 28.9% YoY to INR7,230m (our estimate: INR6,272m) in 2QFY19. EBITDA grew 10% YoY to INR1,346m (our estimate: INR1,325m), with the margin contracting 320bp YoY to 18.6% (our estimate: 21.1%). Adj. PAT grew 17.7% YoY to INR944m (our estimate: INR944m), supported by a lower tax rate of 23.1% v/s 28.8% in 2QFY18.
- 1HFY19 performance: Revenue grew 19% YoY to INR13,286m. EBITDA was flat YoY at INR2,527m, with the margin shrinking 370bp YoY. Adj. PAT declined 2% YoY to INR1,761m. For 2HFY19, we expect revenue growth of 15% YoY, with margin expansion of 240bp YoY.
- Healthy all-round performance: PI’s domestic business delivered robust growth of 24% YoY, leveraging on its established brands and new launches over the last 2-3 years. CSM business, too, grew by 32% YoY due to improved shipments in the export markets. PI commercialized two new products each in the domestic and exports markets with positive response. Growth hereon is expected to be driven by enhanced visibility of scale-up in exports and healthy R&D pipeline being translated into commercialization.
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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