Investec reiterates buy on PI Industries, target price Rs 1,300

Investec has reiterated buy rating on PI Industries in the long term with a target price of Rs 1,300. Shares of PI Industries declined 1.77% to Rs 1,262 on Monday, while the BSE sensex closed 261.68 points down at 37,123.31.

Company Financials

For the quarter ended 30-06-2019, the company has reported consolidated sales of Rs 754.10 crore, down -6.30 % from last quarter sales of Rs 804.80 crore and up 24.52% from last year same quarter sales of Rs 605.60 crore. The company has reported net profit after tax of Rs 101.60 crore in the latest quarter.


Investment Rationale

PI Industries executed an offer to buy Isagro Asia, a 100% subsidiary of Isagro S.p.A (Italy), for a consideration of ?350 crroe implying a valuation of 10x EV/EBITDA and 1.2x P/S, on a TTM basis. With the requisite approvals already in place, this acquisition would fast-track capacity expansion leading to growth, said the brokerage. However, margins & return ratios could moderate in the near term, it added.