Hold P.I. Industries Ltd For Target Rs. 2,944 by Prabhudas Liladhar Capital Ltd
Weakness from largely concentrated portfolio continues
PI reported consolidated revenue from operations of Rs15.7bn, reflecting a 12% YoY decline while 14% QoQ increase led by lower base. The CSM segment, which contributed ~74% of total revenue, witnessed 15% YoY degrowth, impacted due to global agrochemical industry contraction. The management expected this segment to recover in H2FY27, however potential challenges due to external environment can’t be ruled out. New products launched in the last 3 years showed contribution of 18% in FY26. The domestic agchem branded business also declined 9% YoY, impacted by high channel inventory, and reduction in crop acreages. The pharma business, still in its ramp-up phase, reported revenue of Rs1,048mn, up 23% YoY and 75% QoQ. The company has onboarded a new pharma customer in the past 12 months.
We expect near-term challenges in the agrochemical space to weigh on overall performance. Concentration towards pyroxasulfone which has gone off-patent, would also continue to challenge growth. However, medium-term growth will be supported by biologicals recovery and scale-up in pharma. We estimate consolidated revenue/EBITDA/PAT CAGR of about 6%/9%/4% over FY26–28E. At CMP, the stock trades at 31x FY28 EPS. We value the stock at 31x FY28 EPS, arriving at TP of Rs2,944, and maintain our ‘HOLD’ rating.
Consolidated revenue increases by 14% QoQ and -12% YoY:
Consolidated revenue stood at Rs15.7bn (-12% YoY/14% QoQ) (PLe: Rs15.6bn, Consensus: Rs16.7bn). FY26 revenue stood at Rs67.1bn, 16% lower than FY25. Revenue declined YoY due to 14% decline in agchem segment. Gross margin was at 57.8% (vs 55.1% in Q4FY25 and 59% in Q3FY26). Absolute gross profit was at Rs8.1bn, lower 8% YoY but up 12% QoQ
EBITDAM contracts by 400bps YoY:
EBITDA stood at Rs3.4bn (-26% YoY/ 11% QoQ), (PLe: Rs3.6bn) and EBITDA margin came at 21.5% (vs 25.5% in Q4FY25 and 22% in Q3FY26). EBITDAM declined YoY due to lower operating leverage. Reported PAT declined to Rs2,002mn (-39% YoY/ -36% QoQ), with PAT margin stood at 13% (vs 18% in Q4FY25 and 23% in Q3FY26), impacted by a higher effective tax rate due to an increased share of business from the non-SEZ segment during Q4FY26.
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SEBI Registration No. INH000000271Accumulate Paradeep Phosphates Ltd For Target Rs.141 by Prabhudas Liladhar Capital Ltd
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