PI Industries Q1 Results Review - CSM Business Continues Its Healthy Growth Momentum: Dolat Capital

Dolat Capital Report

PI Industries Ltd. reported a healthy performance for the quarter registering sales growth of 23.8% YoY of Rs 19.1 billion (our estimate: Rs 17.1 billion) driven by strong performance from the custom synthesis management business.

Ebitda grew by 35.4% YoY to Rs 4.7 billion (our estimate: Rs 3.9 billion) translating to an Ebitda margin expansion of 209 basis points to 24.5%.

Healthy operating performance was driven by higher operating leverage and improved product/business mix.

Profit after tax grew by 45.9% YoY to Rs 3.8 billion (our estimate: Rs 3.1 billion) on account of strong operating performance.

Outlook and Valuation

Healthy outlook for CSM business, uptick in domestic demand and scale up of pharma business should help PI Industries to sustain its growth momentum over FY24.

With strong cash on books the company will continue to invest in newer opportunities both on the pharma as well as agchem side which will drive its growth in the mid to long term.

With no change in guidance (18-20% growth in Agchem), we have broadly maintained our estimates for FY24E/FY25E.

Owing to the run up in stock price since our last note we downgrade the stock to 'Accumulate' keeping our target price unchanged at Rs 4,385 (37 times FY25E earnings per share).

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