Multibagger stock is 8% near its 52-week-high, Sharekhan is bullish for new high

With a market valuation of 48,978.40 crore, PI Industries Ltd. is a large cap firm that manufactures pesticides and agricultural chemicals. The company is the market leader in the development of granular formulations in India. The firm also manufactures the most generic compounds, including Profenofos, Ethion, and Phorate. On the NSE, the shares of PI Industries are currently trading at 3,236.30 apiece, up by 3.01% from its previous close. The stock had touched a 52-week-high of 3,534.90 on 14-September-21 and a 52-week-low of 2,333.55 on 27-January-22 indicating that at the current price level the stock is trading 8.44% below the 52-week-high and 38.68% above the 52-week-low. The brokerage firm Sharekhan has placed a BUY rating on the stock with a target price of Rs. 3,550 which would be a new high for the stock.

The brokerage firm Sharekhan has said in a note that “PI Industries Limited (PI) reported strong Q1FY23 results with a 7%/9%/19% beat in revenue, operating profit and PAT to Rs. 1,543 crore/Rs. 346 crore/Rs. 262 crore, up 29%/39%/40% y-o-y led by superior growth in CSM revenue, beat in OPM and lower tax rate of 16.6% (versus assumption of 21%). CSM revenue growth of 42% y-o-y to Rs1,142 crore was stronger than our expectation of 24% y-o-y growth and reflects robust volume growth of 30% along with benefit of favourable pricing and currency impact of 12% y-o-y. However, domestic business witnessed muted revenue growth of 4% y-o-y to Rs401 crore due to delayed monsoon (which impacted crop acreage under Kharif) and largely reflects better pricing and favourable product mix. OPM improved by 155 bps y-o-y to 22.4% and was 53 bps higher than our estimate of 21.9%. Margin improvement reflects benefit of price hike to pass on rise in raw material cost.”

“PI’s strong balance sheet provides ample scope for organic and inorganic growth over the medium to long term and its earnings growth outlook (expect revenue/EBITDA/PAT CAGR of 21%/27%%/30% over FY2022-FY2024E) remains robust supported by CSM order book of $1.4 billion and ramp-up of 9 new products commercialised in last one year. Hence, we maintain a Buy rating on PI Industries with a revised PT of Rs. 3,550. At CMP, stock trades at 42.2x its FY2023E EPS and 33.7x its FY2024E EPS,” said the research analysts of the broking firm Sharekhan.

“Demand remains encouraging in both domestic (strong Rabi season outlook) and export markets (order book of $1.4 billion) and the company has guided for an 18-20% revenue growth and margin improvement for FY23. Commissioning of additional capacity and contribution from newly-launched brands would fuel growth. Moreover, funds of Rs. 2,000 crore raised via the QIP are expected to be deployed for acquisition of pharmaceutical assets and drive inorganic growth over medium to long term, apart from diversifying its business and enhancement of technological capabilities,” said the brokerage.

In the last 5 years, the stock has given a multibagger return of 366.74% and in the last 3 years, the stock has generated a multibagger return of 199.06%. However, on a YTD basis, the stock has gained 5.87% so far in 2022 and at the current price level the stock is trading higher than 5 days, 10 days, 20 days, 50 days, 100 days and 200 days Exponential Moving Average (EMA).

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.

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