Emkay Global

CMP: ₹1,407.9

Target: ₹1,600

PI Industries (PI) has reported an accident on one section of its multi-product plant (MPP) at Jambusar. This accident caused two fatalities, while nine others are injured. According to management, the accident area has been sealed temporarily by local police and hence, the company will be able to access the damage only in the coming days. Management has been in touch with its customers and has appraised them of the situation. They do not expect any effect on its order book due to the aforementioned incident.

PI’s Jambusar plant is an MPP catering entirely to its custom synthesis segment (exports). The plant has nine MPP, out of which one is affected due to the above incident. In our view, a three-month shut down could maximum hit revenue/PAT of ₹60 crore/ ₹20 crore, which is insignificant. It would also have some inventory (15-20 days) that can be used to service exports during the plant shut down. We await further clarity from its management on the timelines for production resumption at the unit.

Though the stock could come under pressure due to this accident, we believe that any significant correction offers an attractive opportunity.