Shares of PI Industries Ltd. have recently plunged to a fresh 52-week low, currently trading at Rs 1756.10 on the BSE after hitting an intraday low of Rs 1730. The agrochemicals stock has been in a significant downtrend, recording negative returns across various periods: a 36.77% decline over five years, a steep 52% drop in the past year, and a 42% decrease over six months. The only long-term positive is a 106% gain over ten years.
Brokerage Views on PI Industries
The company's recent performance has led to mixed reactions from leading brokerages.
Nuvama's 'HOLD' Rating
Brokerage firm Nuvama has maintained a 'HOLD' rating on PI Industries, citing the sharp correction in the stock price and limited downside potential from current levels. Nuvama noted a weak Q2 performance, with consolidated revenue declining 9.1% year-on-year to Rs 1,700 crore, primarily due to an 18% contraction in agrochemical exports. Gross margin fell by 780 basis points to 49.5%, and the EBITDA margin stood at 13.7%, missing Nuvama's estimates by a significant 32%.
While domestic agriculture and pharmaceuticals showed growth, expanding 19% and 20% respectively, their performance was insufficient to offset the weakness in the custom synthesis and manufacturing (CSM) business. Consequently, Nuvama has significantly reduced its FY27 and FY28 earnings estimates by 35.9% and 28.2% respectively, shifting its valuation base to FY29 and slashing its target price to Rs 1,682 from Rs 2,801.
Motilal Oswal's 'BUY' Rating
In contrast, Motilal Oswal has reiterated a 'BUY' rating for PI Industries, setting a target price of Rs 2,060. The brokerage remains cautiously optimistic about the company's medium-term prospects, underpinned by a healthy order book of approximately $1.25 billion and expectations of a gradual recovery in global agrochemical demand.
Motilal Oswal anticipates growth to be supported by higher contributions from new CSM molecules, expansion in domestic agriculture and biologicals, and the scaling up of newer businesses like pharmaceutical CRDMO and electronic specialty chemicals. However, they acknowledge persistent pressure on realizations and margins across key CSM molecules, leading to cuts in FY27 and FY28 earnings estimates by 38% and 27% respectively. Motilal Oswal projects a decline in revenue, EBITDA, and adjusted profit after tax for FY27, with a recovery expected in FY28.
About PI Industries
PI Industries is a prominent player in the agrisciences and fine chemicals sector. It operates on a dual business model: 'In-licensing' for the Indian market and 'Custom Synthesis and Manufacturing' (CSM) for its global clientele. The company acts as a strategic partner to global innovators, providing end-to-end solutions from research and development to commercial production. PI Industries has transitioned from a domestic manufacturer to a technology-driven global partner, establishing a significant presence in the global agrochemical supply chain.