Accumulate PI Industries, target price Rs 1,889: Angel Broking

The management has provided strong growth guidance for FY2021 despite uncertainties over the Covid-19 situation.

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Angel Broking has given an accumulate rating to PI Industries with a target price of Rs 1,889. The share price moved up by 2.19 per cent from its previous close of Rs 1662.75. The stock’s last traded price is Rs 1699.15.

PI Industries is a leading player in providing custom synthesis and manufacturing solutions (CSM) to global agrochemical players. The CSM business accounted for 72 per cent of the company’s revenues in FY20 and is expected to be the key growth driver for the company in future.

Investment Rationale


The company has been increasing its share of high margin CSM business driven by strong relationship with global agrochemical players, says the brokerage. PI 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. The management has provided strong growth guidance for FY2021 despite uncertainties over the Covid-19 situation, driven by both the CSM and Indian agrochemical business. The company is also raising capital to augment capacity which will drive the next leg of growth for the company.


PI Idustries-AngelBrokingJuly92020


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.
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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.
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