Buy PI Industries, target price Rs 1,785: Angel Broking

Angel Broking has given a buy rating to PI Industries with a target price of Rs 1,785. The share price moved down by -0.72 per cent from its previous close of Rs 1593.85. The last traded stock price is Rs 1,582.45.

PI Industries is a leading player in providing custom synthesis and manufacturing solutions (CSM) to global agrochemical players. The CSM business accounted for 66 per cent of the company’s revenues in FY19 and is expected to be the key growth driver for the company in future. The company has been increasing its share of high margin CSM business driven by strong relationships with global agrochemical players.

Investment Rationale

According to the brokerage, PI Industries is leveraging its chemistry skill sets and is looking to diversify its CSM portfolio to electronic chemicals, pharma API, fluoro chemicals, etc. which will help drive business. Though the company’s operations have been impacted due to the Covid-19 outbreak, the brokerage expects the company to be amongst the least impacted in the sector given that the company is a pure play agrochemical player which are part of essential commodities.

Financials

For the quarter ended March 31, 2020, the company reported consolidated sales of Rs 855.20 crore, up .64 per cent from last quarter sales of Rs 849.80 crore and up 6.26 per cent from last year's same quarter sales of Rs 804.80 crore. The company has reported net profit after tax of Rs 109.90 crore in the latest quarter.

Promoter/FII Holdings

Promoters held 51.35 per cent stake in the company as of March 31, 2020, while FIIs held 12.13 per cent, DIIs 21.62 and public and others 14.89 per cent.