PL First Cut – PI Industries 2QFY24

PL First Cut – PI Industries 2QFY24 – Swarnendu Bhushan – Co-Head of Research, Prabhudas Lilladher Pvt Ltd

PI Industries 2QFY24 First Cut: Robust Performance; Beat on all fronts

(CMP- Rs3,580; Mcap-Rs543bn; TP-Rs4,850; BUY)

❇️ Key highlights of 2QFY24 results:

Revenue: Rs21.2bn, +20% YoY (6%/2% above our/cons. est)

EBITDA: Rs5.5bn, +28% YoY (11%/10% above our/cons. est)

EBITDA margin: 26.0%, +160 bps YoY (100bps/190bps above our/cons.est)

Net Profit: Rs4.8bn, +44% YoY (24%/20% above our/cons est)

Other highlights

❇️ Exports revenues were up 22% YoY to Rs15.6bn (PLe Rs15.6bn) (Volume/Price growth of 21%/1%)

❇️ Domestic revenues were down 2% YoY to Rs4.8bn due to erratic monsoons and dry spells resulting in lower sales of insecticides and herbicides in key geographies.

❇️ Pharma acquistion revenue contribution: Archimica ( started contributing from 27th April) of Rs651mn and Therachem ( from 2nd June23) of Rs 68mn.

❇️ Favourable product mix resulted into gross margin expansion of 140bps YoY to 47%; while higher gross profit coupled with operating leverage has resulted in EBITDA margin expansion of 160bps YoY to 26%.

❇️ Net cash stood at Rs28.9bn(Incl. QIP proceeds of Rs19.7bn).

❇️ Capex done in 1HFY24 at Rs7.6bn (including Pharma acquired assets of Rs4.97bn) ;key focus of driving higher utilisation by improving throughput in CSM business.

❇️ CSM Order book remained ~1.8bn in Sep’23 flat QoQ.

❇️ Commercialised 3 molecules in CSM Business in 2QFY24; with +40 products at different development stages (>25% of which in Non-agrochem segment)

❇️ 4 new products launched in domestic market in 1HFY24 and plans to launch 2 more products in 2HFY24.

❇️ Commercialization of 4-5 new molecules planned in FY24.

❇️ Confident of achieving 18-20% YoY revenue growth with continued improvement in margins in FY24.