MOSL: PI INDUSTRIES (Buy)-CSM strength intact-dom. agri biz to reverse weakness in 2H
PI INDUSTRIES: CSM strength intact; dom. agri biz to reverse weakness in 2H
(PI IN, Mkt Cap USD2.8b, CMP INR1426, TP INR1633, 15% Upside, Buy)
EBITDA exceeds estimate, revenue/PAT in line: Revenue grew 26% YoY to INR9.1b (our estimate: INR8.8b) in 2QFY20. EBITDA was up 43% YoY to INR1.9b (our estimate: INR1.7b) with the margin expanding 250bp YoY to 21.1% (our estimate: 19.8%). PBT grew 37% YoY to INR1,688m. Adj. PAT was up 30% YoY to INR1.2b (in-line).
- For 1HFY20, revenue/EBITDA/adj. PAT grew 25%/36%/27% YoY.
- CSM drives overall performance: CSM revenue grew 52% YoY on the back improved momentum in new molecules launched over the last 3-5 years and contract manufacturing of Rynaxypyr. Domestic business revenue declined 12% YoY due to the discontinuation of FORATOX, value de-growth in Nominee Gold, lower volume of Osheen, erratic/delayed monsoon, and higher trade inventory. Gross margin shrank 50bp YoY to 42.4%, which, in our view, can be attributed to pricing pressure in Nominee Gold and volatility in RM prices.
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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