Sharekhan's research report on PI Industries
PI Industries focus to expand product offers in pharma/specialty chemicals would bring it into the league of global CSM players with products across the agrochemical, pharmaceutical and specialty chemical segments. This would drive sustained sustain high growth of 20-25% in the CSM business and improve margin profile. Domestic formulation business is well-placed to exceed industry growth rates given its pan-India reach and novel product launches (25 new products under pipeline). We expect a 15% CAGR over FY2021-FY2024E for the segment. Potential successful acquisition of a pharmaceutical assets (having signification exposure to exports market) with a target revenue share of 20-25% hints towards high growth prospects and efficient capital allocation.
Outlook
PI Industries’ premium valuation is justified given our expectation of a 25% PAT CAGR over FY21-24E and diversification of product offerings in the high-growth CSM business. Hence, we maintain a Buy on PI Industries with a revised PT of Rs. 3,300.
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