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New launches to boost revenue visibility; maintain BUY

In continuation of our earlier report (click here), we have further analysed the market opportunity for PI’s upcoming molecules in its CSM business. Our analysis suggests that besides the already highlighted molecules (Fluindapyr, and Valifenalate), PI aims to manufacture several additional patented molecules (refer Exhibit 1) and has started manufacturing for innovators several molecules that have gone off-patent recently (refer Exhibit 2). In our view, the new patented molecules provide an opportunity of ~USD 100- 150mn for PI. This, clubbed with ~USD 200mn opportunity from Fluindapyr and Valifenalate, augurs well on the base of ~USD 500mn of CSM sales in FY22. We believe that with additional volumes of existing products, PI would be able to achieve its target of more than ~20% revenue growth in FY23 (mainly volume-led) and FY24 as well. Although we agree that the pharma acquisition continues to be a key overhang, we maintain BUY with unchanged estimates and a Sep’23 TP of INR 3,790/share as the company’s base agrochemicals business outlook remains promising.

Several additional patent molecules likely to be commercialised soon…: As per our analysis, PI is likely to commercialise/ramp-up several patented molecules such as Tetraniliprole (by Bayer), Bicyclopyrone (by Syngenta), Dichlobentiazox (by Kumiai), and Pyridachlometyl (by Sumitomo). These molecules combined have peak estimates sales of ~USD 800mn. Assuming USD 300-400mn active ingredients market for these molecules, and PI cornering half or onethird of this market, there is a potential USD 100-150mn opportunity for the company.

some of which have been launched recently or about to be launched: Tetraniliprole (diamide insecticide) has been recently launched in 21 countries by Bayer, with a peak sales potential of EUR 300mn (refer Exhibit 3). Syngenta’s Bicyclopyrone (Acuron) herbicide was launched in the US market in 2015, and with peak sales potential of more than USD 250mn it remains a key molecule of Syngenta’s ~USD 3bn product pipeline (refer Exhibit 4). Kuimai is in the process of registering Dichlobentiazox (estimated peak sales potential of ~USD 70- 100mn) in several countries.

Ramp-up seen of various molecules going off-patent recently: Besides the patented molecules highlighted above, as per our understanding, PI has been ramping up volumes of many molecules that have gone off patent recently, such as a) Tefuryltrione (jointly developed by Bayer and Zen-Noh), b) Orysastrobin (fungicide developed by BASF), with an estimated market size of USD ~750mn in CY22 (click here), c) Tolfenpyrad (developed by Nichino), and d) Amisulbrom (fungicide developed by Nissan).

Estimates unchanged; maintain BUY: We believe that with a good pipeline of upcoming patented molecules and additional volume ramp-up of off patented molecules, PI would be able to achieve its target of more than ~20% revenue growth in FY23 -24E. We estimate PI’s earnings to post ~24% CAGR over FY22-25E. We maintain BUY with an unchanged Sep’23 TP of INR 3,790/share as we believe PI’s base agrochemicals CSM business outlook remains promising. Key risks: a) global slowdown in agrochemicals; and b) acquisition of value destructive pharma assets.

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