Generating consistent returns year after year is a challenging feat for any stock in the equity markets. However, PI Industries has proven to be an exception to this norm. The company's shares have demonstrated exceptional performance by consistently delivering positive returns.
Over the last 10 years, the stock has delivered a whopping return of 2564%, skyrocketing from ₹124 apiece to its current market value of ₹3,304. During the period from CY13 to CY22, the stock recorded positive growth every year except for CY18.
The company is engaged in the manufacturing and distribution of agro chemicals. It also offers custom synthesis and contract manufacturing services to global agrochemical and pharmaceutical companies.
It has recently entered into the pharma API (Active Pharmaceutical Ingredient) and CDMO (Contract Development and Manufacturing Organization)) space by acquiring Therachem Research Medilab LLC and Archimica.
PI Industries expects ₹550–600 crore of revenues for Therachem and anticipates margins of 15–18% in the first year, which will improve going forward.
"The company's pharma foray would diversify its earnings stream and drive medium- to long-term growth for the company. Even after recent acquisitions, PI would have a strong net cash position of Rs. 2,304 crore to pursue both organic and inorganic growth opportunities," said the brokerage firm Sharekhan.
The brokerage anticipates strong revenue, EBITDA, and PAT growth for PI Industries, projecting a robust CAGR of 20%, 19%, and 19%, respectively, over FY2023 to FY2025E.
This growth will be driven by a substantial CSM order book of $1.8 billion and the successful commercialization of nine new products within the past year, it said.
The brokerage maintains a 'buy' rating on the stock, expecting improved growth after integrating TRM and Archimica's acquisition. It has an unchanged target price of Rs. 4,200 apiece on the stock. This price target indicates a new life-time high for the stock.
According to Motilal Oswal, PI Industries has implemented strategies that will sustain its growth momentum in the near term. These strategies include maintaining consistent growth in the CSM business, driven by a robust order book; increasing the commercialization of new molecules, and enhancing sales of existing molecules.
Introducing new products in the domestic market, with seven new launches planned for FY23 and the recent acquisition in the pharma API and CDMO segments is expected to become a key driver of future growth for PI Industries, allowing the company to establish a unique position in the pharmaceutical sector by leveraging its core competencies.
The brokerage reaffirmed its 'buy' recommendation on the stock, valuing it at 35x FY25E EPS to arrive at a target price of ₹4,300 apiece.
In Q4FY23, PI Industries witnessed a surge in net profit, which rose by 37.74% to ₹281 crore compared to ₹204 crore in the same quarter last year. Its sales increased by 12.25%, reaching ₹1,566 crore in Q4 as compared to ₹1,395 crore during the same quarter last year.
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.
