PI Industries Stock Analysis| PI Industries Q2FY21 Results Analysis

PI Industries Q2FY21 Performance Review

Introduction

PI Industries is a large cap company operating in Pesticides/Agro chemical sector. Company operates in an elite sector and has quite a lot of government support, thus auguring its performance. Recently company reported its latest quarter results. Company’s standalone sales increased 18% YoY . Let us analyze the Q2FY21 results in this blog.

PI Industries Q2FY21 Performance Review

• Company currently has a market capitalization of ~INR 32,000 crore. According to AMFI Market capitalization, this is a large cap company.
• This may lead to PI industries being a part of large cap indices, which will ultimately lead to significant passive investment flow in the company.
• We can see the other details of the company like PE, 52 week high/low , book value etc. on the stockometer website.

• Company’s PE has currently rerated from current levels mainly as it has posted healthy Q2FY21 results.

Quarterly Results

• As seen. Company has reported healthy Q2FY21 results, with sales increasing 18% on YoY basis .
• Company has also shown a stellar increase in operating profit of 47% , resulting in operating profit expansion of 6% to 28%.
• As seen, the PAT has registered a growth of ~48%, resulting in strong profit growth of 70% YoY.
• This is the reason that stock is trading at higher multiples as market participants are quite positive about company’s growth prospects.
• If the company keeps posting such healthy quarterly revenues, FY21 yearly growth can be ~20%.
• This is a very positive sign especially when GDP is expected to fall by 9-10%, but company is posting such healthy results mainly being in agro-chemical sector.

Key Ratios

• As seen company has healthy return ratios with RoE and RoCE > 20%. It has almost negligible D/E and healthy interest coverage ratio despite being a capital intensive company.
• If we take a look at company’s sales and Profit CAGR over the years, we can see that last 3 year and 5 year growth is not that impressive.
• However the company has consolidated its performance in this year and is on growth trajectory.

Earnings Visibility

• Currently, company has an order book ~$1.5 bn which is ~ INR 11,000 crore.
• Q2FY21 revenue is ~1071 crore, if company continues such performance for the rest of the quarters, its FY21E revenue can be ~INR 4400 crore.
• This indicates that company has healthy earnings visibility for at least next 2-2.5 years.
• Company also looks well place in terms of reserves and cashflows and can take any acquisition if required.

Shareholding Pattern

• As seen, Indian promoters have declined their stake in this quarter from ~51% to ~47%, while DIIs have increased their stake from 19% to ~26%.

Strong Business Outlook

• All Manufacturing Facilities are operational
• Capacity Utilization building back to Pre-COVID levels
• Good Monsoon – Positive Outlook for overall Agriculture Sector
• Also, Good Outlook for Rabi Crops as reservoirs are full
• Expecting Robust Demand for branded products to drive growth