Though PI Industries (PI) reported numbers came in strong, it was led by consolidation of pharma business and one-time benefit from recovery of theft material (Rs700mn in sales). The key earnings driver CSM business CSM growth slowed down to 13%YoY (from 33% in Q1 and 22% in Q2) despite driven by driven by volume growth and ramp up in newly commercialised products. Management has maintained ~18-20% growth guidance and expects ramp up in pharma business to be gradual. Lower tax rate is likely to continue for one more year. Analysts of IIFL Capital Services raise FY24-25 earnings by 2-6% on the back of lower tax rate (14- 15%) and cut FY26 earnings by 3%. Their TP rolled forward to Mar’25 comes down marginally to Rs3,485 (30x Mar’26ii P/E).
CSM growth slowing down:
On a reported basis, PI delivered sales/Ebitda/Pat growth of 17%/33%/27%YoY. The performance consists of Pharma revenues and one-time benefit from recovery of theft material. Adjusting for pharma revenues, sales growth would have been 9.7%YoY. CSM growth slowed down to 13%YoY despite driven by volumes and ramp up in newly commercialised products. CSM order book too declined by US$100mn to $1.7bn. Domestic business declined by 6% due to delayed and erratic spread of monsoon.
Development expenses drags pharma profitability:
Pharma business revenues stood at ~Rs1.27bn, however Ebitda was just Rs4mn. As per the management, pro-forma EBITDA for M9FY24, before development spends of ~Rs350mn stood at ~16%. The development spends will be continued for couple of quarters, post which profitability is expected to pick up.
Outperformance ending soon:
PI delivered sales/Ebitda/pat growth of 20%/31%/38% during M9FY24 while the industry peers struggled with destocking and price corrections. Such outperformance came on the back of robust 22% growth in the CSM business (2/3rd of revenues) which will run into high base from Q1’25 onwards. This coupled with the weak guidance by Kumiai Chemicals on Axeev (Pyroxasulfone, 3yr Cagr of 4.8%) will create headwinds in FY25.
Related Tags
IIFL Customer Care Number
(Gold/NCD/NBFC/Insurance/NPS)
1860-267-3000 / 7039-050-000
IIFL Capital Services Support WhatsApp Number
+91 9892691696
Download The App Now
Follow us on
2025, IIFL Capital Services Ltd. All Rights Reserved
IIFL Capital Services Limited - Stock Broker SEBI Regn. No: INZ000164132, PMS SEBI Regn. No: INP000002213,IA SEBI Regn. No: INA000000623, SEBI RA Regn. No: INH000000248, DP SEBI Reg. No. IN-DP-185-2016
ARN NO : 47791 (AMFI Registered Mutual Fund Distributor)
This Certificate Demonstrates That IIFL As An Organization Has Defined And Put In Place Best-Practice Information Security Processes.
