Shares of PI Industries have given solid returns to its long-term investors. The stock has surged around 345 percent from around ₹720 in August 2017 to currently trade over ₹3,200 per share.
However, in the last 1 year, the stock has been absolutely flat on the back of massive market volatility due to a mix of domestic and global factors. In 2022 YTD, the scrip has risen 6 percent, however, in just in July the stock surged over 20 percent on the back of strong earnings.
The stock also underperformed most of its peers. In the past 1 year, SRF jumped 35 percent, Vinati Organics added 12 percent, Sumitomo Chemicals gained 8 percent, and Atul rose 3 percent, however, Aarti Industries lost 14 percent.
Net profit of PI Industries rose 40.17 percent to ₹262.40 crore in the quarter ended June 2022 as against ₹187.20 crore during the year-ago quarter. Its sales jumped 29.27 percent to ₹1543.20 crore in QFY23 versus ₹1193.80 crore during the same quarter last year.
PI Industries, incorporated in the year 1946, is a large-cap company operating in Pesticides/Agro Chemicals sector. The company is engaged in the manufacturing and distribution of agrochemicals. It is an agri-sciences company with a strong presence in both domestic and export markets. The company has three manufacturing facilities in Gujarat and a Research & Development centre at Udaipur.
Analysts remain bullish on the stock, despite its underperformance in the past 1 year on the back of its robust financial performance and strong guidance for FY23.
Domestic brokerage Prabhudas Lilladher raised the scrip's target price to ₹3,450 from ₹3,340 earlier while maintaining a buy call.
"PI Industries remains confident to achieve revenue growth of over 20 percent for FY23. Despite cost-related headwinds, the company has taken price hikes both in the domestic and Custom Synthesis Manufacturing (CSM) segment to pass on the inflated cost which should support margins going forward," said PL.
Analysing the June-quarter results, PL noted that the firm posted better than expected numbers for the quarter under review. The company's consolidated revenues jumped 29 percent largely driven by 42 percent and 4 percent YoY growth in CSM and domestic business, respectively, noted the brokerage. It further pointed out that CSM grew 42 percent YoY driven by strong volume and price growth across key products while domestic revenue was up 4 percent YoY largely led by price-led growth and aided by a healthy response to newly launched products.
Inflationary raw material cost scenario offset by favorable product mix and price hikes led to stable margins, it added.
View on the sector
Commenting on the overall sector, brokerage house Sharekhan said that the Indian specialty chemicals sector is well poised to capitalise on global tailwinds and expand its global market share to 7-8 percent in the next few years from 4 percent currently.
This will be supported by structural drivers, including China Plus One strategy, import substitution, and opportunities emerging from the recent supply chain disruption in China, it added.
"Agri-input companies are also well poised to reap benefits of normal monsoon (which would drive agro-chemical demand in the domestic market) and buoyant international demand. Thus, the recent correction in the stock price of agro and specialty chemical companies provides a good opportunity to invest in quality stocks as we see structural earnings growth tailwinds remaining intact," it advised.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of MintGenie.