Target: ₹4,880

CMP: ₹4,187.70

During the quarter, PI Industries witnessed a 6 per cent y-o-y reduction in the domestic segment. However, given the positives on reservoirs and traction in new products, it expects double-digit growth in domestic revenue during H2. On the other hand, while the company reported a 12 per cent growth in agchem exports, it anticipates some softness in the agchem export segment due to continued global industry challenges and resulting uncertainties.

Accordingly, the management has lowered its expectations for export growth to single-digit or near double-digit growth for H2.

PI remains focused on exploring growth opportunities while improving profitability through a better product mix and disciplined working capital management. The company has incurred a total capex of ₹443 crore during H1FY25, compared to ₹266 crore in H1-FY24, continuing its focus on improving capacity utilisation. It has maintained its capex guidance of ₹800-900 crore for FY25.

Despite current industry-related challenges and high inventory levels with innovators, we expect revenue growth to accelerate as newer products and the Pharma business contribute more significantly in the coming years.

We upgrade our rating on the stock from Hold to Buy considering attractive valuations post the recent correction in stock price while long-term growth prospects remain intact.

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