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Alpha | PI Industries Ltd.


Oct 29, 2023


PI Industries Ltd. – Sturdy participant in Agro-Chemical compounds area

PI was arrange in 1946 as an edible oil refinery by the late Mr. P P Singhal. The corporate later entered the agrochemical formulations enterprise. Within the mid-Nineteen Nineties, PI diversified into Customized Synthesis and Manufacturing (CSM) exports for international agrochemical innovator corporations. PI at the moment operates within the home agricultural inputs and CSM exports segments. It’s a main participant within the home agricultural inputs sector, primarily dealing in agrochemicals and plant vitamins. Within the CSM exports phase, its enterprise pursuits embrace dealing in customized synthesis and contract manufacturing of chemical compounds, which constitutes techno industrial analysis of chemical processes, course of improvement, lab and pilot scale-up, in addition to industrial manufacturing. The PI group has 4 built-in manufacturing amenities unfold throughout 100+ acre land.

Merchandise & Companies:

The corporate has a variety of chemical merchandise in classes like Pesticides, Herbicides and Fungicides. It additionally has some merchandise on speciality division. Aside from these, the corporate offers CSM (Customized Synthesis and Manufacturing Options) which entails from analysis to manufacturing.

Subsidiaries: As on FY23, the Firm has 7 Wholly-owned Subsidiaries and a pair of Joint Ventures.

Key Rationale:

  • Established place – A presence of over 5 a long time within the home agricultural inputs enterprise, a wholesome product combine, management in a number of generic product segments, and growing variety of launches by way of the ILCM (in-licensing and co-marketing) route have helped the group set up itself as one of many prime 10 gamers on this area. Aside from fiscal 2020, the place delayed monsoon and erratic rainfall through the yr impacted gross sales, home enterprise has witnessed regular progress over the past 5-6 fiscals led by introduction of recent molecules and elevated market penetration. With a strong product line up, supportive coverage setting, and regular monsoon, the home enterprise is predicted to register wholesome income progress over the medium time period.
  • Acquisition – PI Well being Sciences Ltd. (PIHS) acquired Archimica S.p.A., Italy on twenty seventh April 2023. Archimica is an Italy based mostly, extremely respected small molecule API producer and CDMO working for final 75 years in Europe. PIHS additionally accomplished the acquisition of Therachem Analysis Medilab (India & US) and Solis Pharmachem (India) on 2nd June 2023. TRM (Therachem Analysis Medilab) is an modern, chemistry pushed resolution supplier in medicinal chemistry analysis, course of analysis and improvement, specialising within the Uncommon Illness space. All of the above acquisitions quantity to Rs.856 crore.
  • Q1FY24 – PI Industries reported a General income progress of 24% YoY in Q1FY24 to Rs.1910 crore, supported majorly by the export income of Rs.1563 crore, a rise of 37% YoY. Home revenues had been subdued on account of delayed monsoon resulting in quantity degrowth of ~13% as centered efforts had been made to attain income high quality and environment friendly working capital ranges than the volumes. Gross Margin improved to 47%, an enchancment of ~267 bps YoY primarily due to a greater product combine and Pharma enterprise. EBITDA reported a progress of 35% YoY to Rs.468 crore, with EBITDA margin bettering by ~209 bps to 24% on account of beneficial product combine and working leverage.
  • Monetary Efficiency – The corporate generated a Income and PAT CAGR of 23% and 28% over the interval of 5 years (FY18-23). The corporate maintained a median EBITDA Margin of 20%+ for the previous 9 years. The corporate’s steadiness sheet is powerful with zero debt in its steadiness sheet. Common 5-year ROE and ROCE is round 17% and 22% for FY18-22 interval.


India is without doubt one of the main gamers within the agriculture sector worldwide and it’s the main supply of livelihood for ~55% of India’s inhabitants. India has the world’s largest cattle herd (buffaloes), the biggest space planted for wheat, rice, and cotton, and is the biggest producer of milk, pulses, and spices on the earth. In accordance with Inc42, the Indian agricultural sector is predicted to extend to US$ 24 billion by 2025. Indian meals and grocery market is the world’s sixth largest, with retail contributing 70% of the gross sales. India’s agricultural and processed meals merchandise exports stood at US$ 43.37 billion in FY23 (April 2022-January 2023). As per Second Advance Estimates for 2022-23 (Kharif solely), complete foodgrain manufacturing within the nation is estimated at 153.43 million tonnes. India is without doubt one of the largest agricultural product exporters on the earth. In April-December 2022, the general worth of export of agricultural merchandise elevated to US$ 19.7 billion from US$ 17.5 billion over the identical interval of the final fiscal.

Progress Drivers:

  • The agriculture companies sector has additionally recorded a pointy enhance in investments with cumulative FDI influx of US$ 3.02 Billion between April 2000 – March 2023.
  • Initiatives like Kisan Rath (cell app for farmers, FPOs, and merchants), 200+ Kisan Rails, and Krishi Udaan Scheme for produce transportation, Perishable Cargo Centres, chilly storage amenities at Airports and Inland Container Depots in addition to cargo terminals and warehouses.
  • Union price range 2023-24 focuses on reviving rural demand by boosting disposable earnings, allocation to farms and better fund allocation on rural infrastructure, connectivity, and mobility to create long-term jobs.

Opponents: BASF India, Bayer Crop Science, and many others.

Peer Evaluation:

Although PI Industries P/E is increased than its friends, the extent of enterprise progress when it comes to CAGR exhibits the potential of PI industries. BASF then again generated loss in previous and the Bottomline is extremely risky traditionally which ends up in an irregular progress.


The CSM export phase is marked by a considerably de-risked enterprise mannequin, which offers wholesome income visibility and steady profitability. The PI group is without doubt one of the pioneers of CSM within the agrochemical area in India. The CSM export orderbook of the corporate as on Q1FY24 is round USD 1.8 bn. PI Industries stays cautiously optimistic about reaching its 18% to twenty% income progress goal for the present fiscal yr. The Administration is assured of getting again on the expansion path within the home enterprise with the normalization of rainfall through the second half of the kharif season. In addition they preserve the momentum of recent product launches. 5 modern merchandise are deliberate for this fiscal yr. In Q1, the corporate has launched EKETSU. EKETSU is India’s first three-way herbicide combination to supply most weed management and efficacy for complete management in rice herbicides.


We imagine PIIND is well-placed for future progress given the revival of home enterprise and powerful performing export enterprise. Additionally, the current acquisitions by the corporate will pave method for extra progress. We advocate a BUY score within the inventory with the goal worth (TP) of Rs.4077, 37x FY25E EPS.


  • Demand associated Threat – Any slowdown in crop safety chemical demand more likely to influence execution of CSM enterprise and thereby revenues.
  • Monsoon Threat – The failure of the monsoon (and/or adversarial weather conditions) approaching prime of the COVID-19 associated setback may put stress on demand for farm inputs for the forthcoming Kharif season.
  • Working Capital Threat – The agrochemical trade is characterised by working capital-intensive operations, on account of giant stock requirement, seasonality in demand, and prolonged credit score to sellers and distributors.

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