PI Industries Q3 - New Product And CSM Drive Export Growth, Margins; Positive Outlook: Axis Securities

Axis Securities Report

PI Industries Ltd.'s Q3 FY24 numbers were in line with our estimates. One-off gain from the reversal of theft in last Q2 FY24 led to beat on Ebitda and profit after tax. Consolidated Revenue came in line with our estimates, up 18%/-10% YoY/QoQ.

Ebitda beat our estimates by 15% as gross margins improved by 640 basis points YoY on account of better mix. This resulted in an Ebitda margin of 29% versus. 26% both in Q3 FY23/Q2 FY24.

PI Industries profit after tax stood at Rs 449 crore, up 28%/-7% YoY/QoQ, beating our estimate by 27%

Valuation and recommendation:

As we roll forward our estimates to September FY26E, we value the stock at 30 times September 26E to reflect an improved product mix, strong margins, and a strong growth outlook.

We maintain a 'Buy' rating on the stock with a revised target price of Rs 4,200/share, implying an upside potential of 24% from current market price.

Key risks to our estimates and TP

Global recessionary environment, especially a long recession could affect demand for upstream players

The impact of El Nino on Indian agriculture can affect the demand for PIs products

A delay in Capex and the commercialisation of new molecules could affect growth. Stress on return on capital employed in initial phases of acquisition.

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