Moneycontrol PRO
Check Credit Score
Check Credit Score
HomeNewsBusinessStocks

Hold P.I. Industries; target of Rs 1516: Prabhudas Lilladher

Prabhudas Lilladher recommended Hold rating on P.I. Industries with a target price of Rs 1516 in its research report dated February 13, 2020.

February 24, 2020 / 10:57 AM IST
 
 
live
  • bselive
  • nselive
Volume
Todays L/H
More

Prabhudas Lilladher's research report on P.I. Industries

PI's results were marginally lower than our estimates due to higher than anticipated tax rate. Both domestic and CSM businesses continue to grow a rapid pace. It has also completed the acquisition of Isagro which will be incorporated in the financials 4Q onwards. PI plans to raise Rs 20 bn within the next 2 months to leapfrog its capabilities into newer adjacent verticals & niche technologies via organic/inorganic route. Our take from concall is that since capital requirement is immediate & sizeable (~52% of FY20E Balance Sheet size) there could be some kind of inorganic growth opportunity that the management may execute soon. The scale of PI's business may increase by +50% from the Balance sheet perspective (FY20E BS size ~Rs 38 bn) and has potential to take it to a different trajectory. Given the sizeable nature of potential business expansion, we would wait for further developments to frame a view on this. In the existing business EBITDA margins are likely to remain flat @ 21.0-21.5% over the next 2 years as Isagro's low margin business profile is likely to offset all the operating leverage benefits for PI. We have revised our topline/EBITDA/PAT estimates by 2%/4%/3% for FY21E and 3%/2%/0.7% for FY22E.


Outlook

We roll forward to FY22E earnings, maintain our HOLD rating and increase target price to Rs 1516 (Previous- 1355) based on 28x FY22 earnings.

For all recommendations report, click here

Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

Broker Research
first published: Feb 24, 2020 10:57 am

Discover the latest business news, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!

Advisory Alert: It has come to our attention that certain individuals are representing themselves as affiliates of Moneycontrol and soliciting funds on the false promise of assured returns on their investments. We wish to reiterate that Moneycontrol does not solicit funds from investors and neither does it promise any assured returns. In case you are approached by anyone making such claims, please write to us at grievanceofficer@nw18.com or call on 02268882347