PI Industries shares jump nearly 13% to hit a 4-month high; here's why

Shares of PI Industries soared nearly 13% to ₹3,462 apiece during Friday's trade, hitting a 4-month high, after the company announced twin acquisitions into pharma API (Active Pharmaceutical Ingredient) & CDMO (Contract Development and Manufacturing Organization) space.

PI Health Sciences Limited (PIHS), a wholly owned subsidiary of PI Industries Limited (PI), has signed a definitive agreement with Therachem Research Medilab LLC for the acquisition of 100% shareholding of TRM India, which is an Indian subsidiary of TRM US, the company said in an exchange filing on Thursday.

Additionally, PIHS has also entered into a definitive agreement with Plahoma Twelve GmbH for the acquisition of a 100% stake in Archimica S.p.A. (Archimica), the company added.

The acquisitions are a part of PI’s strategic path of diversification, and PI expects this space to be one of its key pillars for future growth, it said.

PIHS will combine the R&D skills of the acquired companies with a brand-new, fully integrated pharmaceutical research facility being built at IKP Hyderabad to provide CRO and CDMO services to a wider range of clients along the whole pharmaceutical value chain.

The acquisition will enable PI to access the strong customer franchises of the acquired companies in regulated markets, it added.

"It was a much-awaited acquisition by PI in the pharma API and CDMO space, which is expected to be one of the key growth pillars for PI in the future. PI is known for pursuing science-led opportunities and has been one of the leading players with a unique business model in the agri-science industry for over seven decades," said brokerage firm Motilal Oswal.

With these acquisitions, PI will create a differentiated position in the pharma sector by leveraging its core competencies in complex chemistry, process development, operational excellence, technology platforms, and global reach through partnerships with prominent innovators, the brokerage noted.

In the last decade, the stock has yielded significant return, rising from ₹132 apiece to the current market position of ₹3,381, which translates to a gain of 2460%.

In Q3 FY23, PI Industries witnessed a surge in net profit, which rose by 57.84% to ₹352 crore compared to ₹223 crore in the same quarter last year. Its sales increased by 19%, reaching ₹1,613 crore in Q3 FY23 as compared to ₹1,356 crore during the same quarter last year.

PI Industries has a strong presence in both domestic and export markets. It operates three manufacturing facilities in Gujarat and maintains a dedicated research and development centre located in Udaipur.

24 analysts polled by MintGenie on average have a 'buy' call on the stock.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of MintGenie.