This stock turned Rs 1 lakh into Rs 82 lakh in 10 years; did you miss the rally?

Agri-sciences firm PI Industries share has delivered return of over 8,000% in the last 10 years. PI Industries share price which stood at Rs 17.81 on December 23, 2009 rose to Rs 1,474.60 during the period. An investment of Rs 1 lakh in this stock in 2009 would now have turned to Rs 82.79 lakh. Stock of PI Industries rose 3.17% to hit an all-time high of Rs 1,529.95 on December 6 compared to the previous close of Rs 1,482.90 on BSE.The stock currently trades at Rs 1,466 and is 4.65% away from 52-week high of Rs 1529.95. Over the years, share price of PI Industries has outperformed benchmark Sensex. The index managed to gain a mere 139.63% compared to 8,279% rise in stock. The past year has been particularly good with the PI stock gaining 73.07%. In comparison, the benchmark Sensex gained 17.32% during the last one year.

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Bullish outlook for the stock

Brokerages are bullish on the stock. On September 9 this year, PI Industries rallied 4 percent intraday to hit a record high of Rs 1,254.05 after Equirus initiated coverage on the stock with a long call. Equirus gave a target price of Rs 1,890, implying 56 percent potential upside.

The brokerage expects the firm to report compounded annual growth rate of 23 percent in terms of revenue over FY19-FY22. The stock has seen significant upside since September 13 after the firm announced execution of an offer for acquisition of 100% stake in Isagro (Asia). It has risen 18% or 224 points since then against previous close of Rs 1,242.25 on BSE. 13 of 22 brokerages rate the stock 'buy' or 'outperform', five 'hold', two 'underperform' and one sell, according to analysts' recommendations tracked by Reuters.

Comparison with peers

PI Industries has listed competitors such as UPL Ltd, Bayer CropScience, BASF India and Rallis India among others. The stock has outperformed its peers in terms of returns during the last ten years.

While UPL has gained 420% in last 10 years, Bayer CropScience share price has risen 583% during the period. BASF India and Rallis India shares have gained 143% and 174.79%, respectively during the same period.

PI Industries has a price to earnings (PE) ratio of 44.49 compared to the industry PE of 25.26. On the other hand, its peers UPL Ltd, Bayer CropScience, BASF India and Rallis India have PE ratios of 120.02, 70.35, 74.10 and 26.34, respectively. PE ratio is calculated by dividing the market price of a share by earnings per share. If a stock has PE ratio of 25, it means one needs to invest Rs 25 in the share to earn Rs 1.

Strong financial performance

The firm has also outshined its peers in terms of financial performance. Revenue rose 24% from Rs 2,337.33 crore in FY18 to Rs 2,900.40 crore in FY 19. Only two of its peers Sharda Cropchem (17.3%) and UPL Ltd (14%) could manage strong revenue growth in the last fiscal. Insecticides India, Rallis India, and Dhanuka Agritech logged 11.1%, 10% and 4.5% revenue growth in the same period, respectively.

In Q2 of current fiscal, the firm logged 30% rise in net profit compared to the net profit of Rs 82.2 crore in the corresponding quarter of previous fiscal. Revenue rose 25 per cent on a year-on-year basis on the back of a strong 52 per cent rise in exports, making up for the slowdown in the domestic market. EBITDA (earnings before interest, tax, depreciation and amortization) margin expanded 250 bps at 21.2 per cent during the quarter.

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During the period of 10 years too, the firm has shown significant improvement in its financial performance. For fiscal ended March 2019, the firm logged Rs 2,900.90 crore in revenue compared to Rs 599.08 crore for fiscal ended March 2010. Net profit rose nearly ten times during the period. For fiscal ended March 2019, the firm logged Rs 407.70 crore in net profit compared to Rs 40.95 crore for fiscal ended March 2010.

By Aseem Thapliyal