Q3FY21 Result Update - PI Industries - ICICI Direct

PI Industries reported topline growth of 37% YoY to Rs. 1162 crore against our estimate of Rs. 1113 crore. Growth was led by both CSM (+40% YoY) and domestic formulation (+26% YoY). OPM expanded 176 bps YoY to 23.7% leading to EBITDA growth of 48% YoY to Rs. 275.5 crore against our estimate of Rs. 259.2 crore. The operational performance was largely led by control on opex along with some improvement in gross margins. PAT grew 61% YoY to Rs. 195.4 crore against our estimate of Rs. 175.7 crore. The bottomline growth was led by higher other income (+104% YoY) owing to increase in liquid investments/cash post QIP and lower taxes (26% vs. 29% in Q3FY20).

Valuation & Outlook

The company has already mobilised Rs. 2000 crore through QIP last year. We expect majority of those proceeds to be invested through inorganic opportunity, which should likely to happen in the next one or two quarters. The company is expected to make a foray into pharma API. In so doing, it plans to enter into the pharma CDMO business. This should provide a long term opportunity. We also expect this venture to aid operating margins for the business and thereby return ratios. FCF generation is also likely to be robust ahead. We value the company at 35x PER of FY23E (~1x PEG). We arrive at a target price of Rs. 2845 (earlier Rs. 2540). We maintain our BUY recommendation on the stock.

For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_PIInds_Q3FY21.pdf

Shares of PI Industries Ltd was last trading in BSE at Rs.2243 as compared to the previous close of Rs. 2249.7. The total number of shares traded during the day was 10892 in over 1278 trades.

The stock hit an intraday high of Rs. 2295 and intraday low of 2216.9. The net turnover during the day was Rs. 24466144.

Source : Equity Bulls

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