Agri-sciences firm PI Industries share has delivered a return of over 8,000% in the last 10 years. PI Industries share price which stood at Rs 15.26 on September 16, 2009 has risen to over Rs 1,200 during the period. An investment of Rs 1 lakh in this stock in 2009 would now be over Rs 82 lakh. The stock hit a fresh all-time high of Rs 1,307.30 on BSE today two sessions after the company announced its acquisition of Italian firm Isagro (Asia). Over the years, PI Industries share has outperformed its benchmark BSE 200 index. The index managed to gain a mere 125.52% compared to 8,170% rise in the stock.
The past year has been particularly good with the PI stock gaining 67.26%. In comparison, the benchmark Sensex lost 1.54% during the last one year.
Bullish outlook for the stock
Brokerages are bullish on the stock. On September 9 this year, PI Industries rallied 4 percent intraday to hit a record high of Rs 1,254.05 after Equirus initiated coverage on the stock with a long call. Equirus gave a target price of Rs 1,890, implying 56 percent potential upside. The brokerage expects the firm to report compounded annual growth rate of 23 percent in terms of revenue over FY19-FY22.
The stock has seen significant upside since September 13 after the firm announced execution of an offer for acquisition of 100% stake in Isagro (Asia). It has risen 4.66% or 58 points since September 13 against previous close of Rs 1,242.25 on BSE.
Motilal Oswal has given a target price of Rs 1,459 for one year, translating into upside of 15.60% from the current market price of Rs 1,262.05 on BSE. 14 of 20 brokerages rate the stock 'buy' or 'outperform', three 'hold' and three 'underperform', according to analysts' recommendations tracked by Reuters.
Comparison with peers
PI Industries has listed competitors such as UPL Ltd, Bayer CropScience, BASF India and Rallis India among others. The stock has outperformed its peers in terms of returns during the last ten years. While UPL has gained 416% in last 10 years, Bayer CropScience share price has risen 759% during the period. BASF India and Rallis India shares have gained 233% and 175%, respectively during the same period.
PI Industries has a price to earnings (PE) ratio of 41.90 compared to the industry PE of 35.78, which signals that the stock is overvalued. It also indicates investors are expecting higher earnings growth in the future in comparison to the sector. On the other hand, its peers UPL Ltd, Bayer CropScience, BASF India and Rallis India have PE ratios of 100.89, 75.27, 66.75 and 25.15, respectively. PE ratio is calculated by dividing the market price of a share by earnings per share. If a stock has PE ratio of 25, it means one needs to invest Rs 25 in the share to earn Rs 1.
Strong financial performance
The firm has also outshined its peers in terms of financial performance. Revenue rose 24% from Rs 2,337.33 crore in FY18 to Rs 2,900.40 crore in FY 19. Only two of its peers Sharda Cropchem (17.3%) and UPL Ltd (14%) could manage strong revenue growth in the last fiscal. Insecticides India, Rallis India, and Dhanuka Agritech logged 11.1%, 10% and 4.5% revenue growth in the same period, respectively. Its Q1 performance in the current fiscal too beat street expectations after the firm logged 60% growth in exports on an year-on-year basis.
Net profit in Q1 rose 23.6% to Rs 101.6 crore compared to Rs 82.2 crore in the corresponding quarter of previous fiscal. Outlook for the stock looks rosy since the management has given a guidance for 20-25% revenue growth with a 50-100 basis points improvement in EBITDA margins in FY20. The firm has a robust order book of $1.4bn (2.8 times FY20E revenues), spread over three-four years.
During the period of 10 years too, the firm has shown significant improvement in its financial performance. For fiscal ended March 2019, the firm logged Rs 2,900.90 crore in revenue compared to Rs 599.08 crore for fiscal ended March 2010. Net profit rose nearly ten times during the period. For fiscal ended March 2019, the firm logged Rs 407.70 crore in net profit compared to Rs 40.95 crore for fiscal ended March 2010.