PI Industries: BUY Call REVEALED! Motilal Oswal Sets Aggressive Target Price Amidst Mixed Results - What Investors Need to Know!

Author

Akshat Lakshkar | Whalesbook News Team

Detailed Coverage:

Motilal Oswal's latest research report on PI Industries highlights a mixed financial performance for the quarter. The company experienced a 16% year-on-year (YoY) decline in revenue, largely attributed to a 13% drop in domestic agrochemical sales and an 18% decrease in its contract manufacturing (CSM) business. Counterbalancing this, the pharmaceutical segment showed robust growth, surging by approximately 54% YoY and now constituting 3% of the overall revenue mix.

Operationally, PI Industries managed to expand its consolidated EBITDA margin by 60 basis points YoY. This improvement was driven by a significant 550 basis point increase in gross margins, which was partially offset by higher employee and other expenses. These increased costs are attributed to strategic investments in the development and promotion of new business ventures.

Outlook Motilal Oswal forecasts a Compound Annual Growth Rate (CAGR) of 7% for revenue, 6% for EBITDA, and 5% for adjusted Profit After Tax (PAT) between FY25 and FY28. While earnings estimates for FY27 and FY28 have been reduced by 6% each, the estimate for FY26 remains broadly unchanged. The brokerage firm maintains its 'BUY' rating on the stock, setting a target price (TP) of INR 4,260, derived from a multiple of 36 times the estimated EPS for September 2027.

Impact This report has a moderate to high impact on the Indian stock market, specifically for investors tracking the chemicals and agrochemical sectors. A 'BUY' recommendation coupled with a raised target price from a reputable brokerage like Motilal Oswal can positively influence investor sentiment towards PI Industries. However, the reported revenue decline in core segments presents a key area for investors to monitor. The market will likely weigh the strong pharma performance and future growth projections against the current operational challenges. Rating: 7/10.

Difficult Terms: - CAGR (Compound Annual Growth Rate): The average annual growth rate of an investment over a period longer than one year, smoothing out volatility to show steady growth. - EBITDA Margin: A profitability ratio indicating profit from operations before interest, taxes, depreciation, and amortization, reflecting operational efficiency. - Adj. PAT (Adjusted Profit After Tax): Net profit after taxes, with non-recurring items excluded for a clearer view of core earnings. - EPS (Earnings Per Share): The portion of a company's profit allocated to each outstanding share of common stock, a key profitability indicator. - TP (Target Price): The price at which a stock analyst or brokerage firm believes a stock will trade in the near future. - Agrochem: Chemicals used in agriculture, such as pesticides and fertilizers, to enhance crop yields and protection. - CSM (Contract Services Manufacturing): PI Industries' custom synthesis and manufacturing services offered to other companies.