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MOSL: PI INDUSTRIES (Buy) -ANNUAL REPORT UPDATES: CSM segment going from strength to strength!

PI INDUSTRIES | ANNUAL REPORT UPDATES: CSM segment going from strength to strength!

(PI IN, Mkt Cap USD7.1b, CMP INR3396, TP INR3720, 10% Upside, Buy)

 

PI’s FY21 Annual Report highlights its intention to build multiple growth engines and take PI to the next level in the global arena, with more substantive participation in the Life Sciences domain. Here are the key insights: 

Pace of commercialization of new molecules increased

• Custom Synthesis and Manufacturing (CSM) saw strong growth of 35% YoY (to INR33.2b) in FY21, driven by volume growth in existing products and the commercialization of five molecules (~90% of CSM revenues come from patented molecules). FY21 saw strong growth despite 31% growth in the previous year. The order book position for the year stood at ~USD1.5b.
• PI operationalized two manufacturing facilities (with capacity enhancements of ~15% in key products) and commissioned a pharma lab in Rajasthan in FY21. PI also undertook process improvements for nine projects to identify and implement cost improvement opportunities at the plant level.
• PI received over 40 active inquiries at different stages and initiated seven new customer relationships in FY21.

 Horticulture to pave way for growth in domestic market

• The domestic Agrochemicals segment revenue grew 39% YoY to INR12.6b in FY21, with (a) the highest ever sales in the Nominee herbicide and Osheen insecticide, (b) the consolidation of the Isagro acquisition, and (c) favorable kharif and rabi acreage. 60%+ domestic revenues were generated from in-licensed molecules.
• In FY21, PI launched two new products - Shield (fungicide) and Londax Power (rice herbicide).
• Going forward, we expect growth in the segment to be driven by (a) a scale-up in launches in FY20 and FY21 (as marketing activity recovers from the COVID impact), (b) new launches in FY22, and (c) expansion in the Horticulture segment.