Dolat Capital recommended accumulate rating on PI Industries with a target price of Rs 2315 in its research report dated August 07, 2020.
Dolat Capital's research report on PI Industries
The company reported a consolidated sales growth of 40.6% YoY to Rs 10.6bn. A seasonally strong quarter for the domestic business coupled with a 23% YoY growth in exports augured well PI Industries. Hiccups on gross-margin came in largely due to business mix coming into play as IS-AGRO Asia’s numbers are a part of the consolidated entity – which typically has lower gross margins than PI’s existing product base. Contraction of 280 bps YoY to 42.0%, was offset by cost optimisation measures. Other expenses grew only by 8.2% YoY to Rs 1.17bn, which helped in deriving operating leverage. EBITDA thus grew by 50.3% YoY to Rs 2.29bn. Depreciation inched up by 44.7% YoY to Rs 427mn, while interest costs too went north by 317.4% YoY to Rs 96mn. However, had little impact on profitability with PAT growth of 43.2% YoY to Rs 1.45bn.
Outlook
We like PI Industries moat in agro-chemicals and contract manufacturing and value PI Industries at 45.0x FY22E EPS of Rs 51.5, and revise our target price and rating to Rs 2,315/share, Accumulate.
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.
Read More