PI Industries

19 Aug

Working toward becoming a technology and IP driven organization- PIIND

Update on the Indian Equity Market:

On Tuesday, Nifty closed 1.2% higher at 11,385. Within NIFTY50, GRASIM(+6.5%), ULTRACEMCO (+3.3%), and JSWSTEEL (+3.1%) were the top gainers, while BPCL (-1.2%), TECHM (-0.9%) and CIPLA (-0.8%) were the top losers. Among the sectoral indices, REALTY (+4.0%), PVT BANK (+2.2%), BANK (+2.2%), and MEDIA (+2.2%) gained the most. PHARMA (-0.1%) was the only sector to end with losses.

Working toward becoming a technology and IP driven organization- PIIND

Excerpts of an interview with Mr. Mayank Singhal, MD&CEO, PI Industries (PIIND) published on Economic times website dated 12th August 2020:
• The companyplans to invest the Rs 20,000 mn QIP funds across different categories over the next 2 quarters. One way is into inorganic opportunities to get into complementary adjacencies- including pharmaceuticals. The other way is by acquisition of smaller blocks which could be synergistic and complementary in terms of technology.
• PIIND has 1 or 2 branded products that it plans to launch in the Indian domestic market in FY21. They also plan to commercialize 2 new products for the global contract manufacturing business.
• Over last 5-6 years, PIIND has made aggressive investments in R&D to become a more knowledge-based partner. They are working towardbecoming more of a technology and IP driven organization over next 4-5 years.
• Mr. Singhal expects India to fare well in the global shift in manufacturing. If supported through strong policies in the area of manufacturing chemical industry, India could move to the next level. India should specifically focus towards IP generation and creation which wouldbe an edge over the Chinese competition.
• In India about 50-60% of agriculture is dependent on monsoons. PIIND has 30-40% of its revenue dependent on India. Considering good monsoons currently, PIIND like all India business-based companies will do well.
• PIIND is supplying an intermediate to a Japanese client, for a drug approved for Covid-19 treatment. PIIND is also looking to supply the intermediate to Indian producers entering into the space.
• PIIND plans to grow aggressively in next 3-4 years by utilizing its competency in chemistry and technology. With that into perspective, PIIND has also recently filed 7 patent applications based on process in chemistry capabilities.
Consensus Estimate (Source: marketscreener website)
• The closing price of PIIND was ₹ 1,965/- as of 18-Aug-2020. It traded at 44.6x/ 35.2x/ 28.7x the consensus EPS estimate of ₹ 44.1/ 55.8/ 68.5 for FY21E/ FY22E/ FY23E respectively.
• The consensus target price of ₹ 2,014/- implies a PE multiple of 29.4x on FY23E EPS of ₹ 68.5.

Disclaimer: “The views expressed are for information purposes only. The information provided herein should not be considered as investment advice or research recommendation. The users should rely on their own research and analysis and should consult their own investment advisors to determine the merit, risks, and suitability of the information provided.”

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10 Aug

Plan to diversify and de-risk operations using QIP funds- PIIND

Update on the Indian Equity Market:

 

On Friday, Nifty closed almost flat- just 0.1% higher at 11,214. Within NIFTY50, ASIANPAINT (+4.7%), BAJFINANCE (+3.7%), and UPL (+3.5%) were the top gainers, while TITAN (-2.5%), HCLTECH (-2.1%) and INFY (-2.0%) were the top losers. Among the sectoral indices, PSU BANK (+1.0%), PVT BANK (+0.9%), and METAL (+0.9%) gained the most.  IT (-1.0%), PHARMA (-0.6%), and REALTY (-0.3%) made the most losses.

 

Plan to diversify and de-risk operations using QIP funds- PIIND

 

Excerpts of an interview with Mr.Mayank Singhal, MD&CEO, PI Industries (PIIND) aired on CNBC-TV18 dated 7th August 2020:

  • PIIND reported 41% growth in 1QFY21. Looking at 2QFY21, management expects export business to continue to grow as it is backed by a good order book.
  • For the domestic business, 1Q is about pre-placement of products. There has been a good demand with the early onset and higher levels of monsoons. Looking at present scenario, management expects domestic business to be in line with estimated growth.
  • PIIND’s latest acquisition, Isagro, started contributing to the revenues 4QFY20 onward. In 1QFY21, Isagro contributed Rs 1,000 mn to the total revenue, a growth of 13% YoY. Out of that, Rs 300 mn were exports.
  • Management expects Isagro integration to be complete by 3QFY21E. Initiative for Isagro is to make it a horticulture specialist in the distribution segment by offering different value proposition to farmers.
  • PIIND expects to commercialize 4-5 new products in FY21. New products do not have a substantial impact on revenue in the first year of commercialization. These products will do well over next 3-5 years.
  • PIIND recently raised capital via QIP. Management is looking at M&A opportunities in adjacent segments, widening technology portfolio and de-risking operations and plan to create a different organization in next 5 years.
  • PIIND was able to have a very good growth in 1QFY21 as the team anticipated certain challenges that could come arise because of China. They were able to adapt swiftly in terms of supply chain and proper management of plants. PIIND lost 10-15 days of production in the early days but is now operating at full capacity.
  • PIIND has formed 2 new subsidiaries for pharma intermediates. The discussions are in very initial phases now. Management expects to share a more detailed communication in next couple quarters.

Consensus Estimate: (Source: investing.com website)

  • The closing price of PIIND was ₹ 1,950/- as of 07-Aug-2020. It traded at 43.7x/ 35.6x/ 29.2x the consensus EPS estimate of ₹ 44.6/ 54.7/ 66.7 for FY21E/ FY22E/ FY23E respectively.
  • Consensus target price of ₹ 1,805/- implies a PE multiple of 27.1x on FY23E EPS of ₹ 66.7.

 

Disclaimer: “The views expressed are for information purposes only. The information provided herein should not be considered as investment advice or research recommendation. The users should rely on their own research and analysis and should consult their own investment advisors to determine the merit, risks, and suitability of the information provided.”

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