Multibagger PI Industries shares jump 11% today pausing 4-day decline; here's why

Shares of PI Industries rose sharply in Friday's trade, halting their four-day losing run. The stock surged 11.33 per cent to hit a day high of Rs 3,412 over its previous close of Rs 3,064.65. The multibagger stock has climbed 16.93 per cent in a year and has zoomed 290.70 per cent in the past five years.

PI Health Sciences (PIHS), a wholly-owned subsidiary of PI Industries, has entered into a share purchase agreement with Therachem Research Medilab LLC (TRM) for acquiring its wholly-owned subsidiaries in India (TRM India and Solis Pharma Chem) and assets in the US. PIHS also executed a definitive document with Plahoma Twelve GmbH for acquiring a 100 per cent stake in Archimica S.p.A (Archimica).

PI Industries' acquisitions, namely: Therachem Research Medilab (TRM) and Archimica in Italy, are likely to be value accretive for the company, said Krishan Parwani of JM Financial Institutional Securities.

"Therachem, acquired at 5.4x FY22 EV/EBITDA including milestone benefits, Indian CDMO/CRO players trade at around 20-25x EV/EBITDA, gives PI the capability to supply patented molecules to pharma innovators, similar to Navin's CDMO business. On the other hand, Archimica, acquired at 5.4x CY22 EV/EBITDA, Indian generic API businesses trade at around 8-10X EV/EBITDA) gives PI access to generic APIs along with building blocks and complex reagent manufacturing capabilities (involving fluorination in a few cases). We believe PI will be able to utilise Therachem's drug discovery resources well to leverage Archimica's manufacturing capabilities and DMFs along with its own scale-up abilities," Parwani stated.

On the technical front, support on the counter could be seen at Rs 3,240.

"At the current juncture, the counter is facing stiff resistance near Rs 3,460-3,470 levels. So, one should book profits near the mentioned levels. On the flip side, a closing above Rs 3,475 will trigger fresh buying," said Jigar S Patel, Senior Manager - Technical Research Analyst at Anand Rathi Shares and Stock Brokers.

"PI Industries looks very bullish on the daily charts and now faces resistance at Rs 3,415. Since daily charts are getting slightly overbought, investors should book profits at current levels or keep a strict stop loss at the support of Rs 3,240," said AR Ramachandran from Tips2trades.

The stock was last seen trading higher than the 5-day, 20-, 50-, 100- and 200-day moving averages. The counter's 14-day relative strength index (RSI) came at 70.80. A level below 30 is defined as oversold while a value above 70 is considered overbought. The company's stock has a price-to-equity (P/E) ratio of 40.91. It has a price-to-book (P/B) value of 7.13.

A total of 98,000 shares changed hands today on BSE, which was nearly 13 times higher than the two-week average volume of 7,569 shares. Turnover on the counter stood at Rs 32.74 crore, commanding a market capitalisation (m-cap) of Rs 50,778.54 crore.

At today's high price of Rs 3,412, the stock traded 7.75 per cent lower from its 52-week high of Rs 3,698.50, a level seen on November 9 last year. That said, the counter has gained 44.18 per cent from its one-year low of Rs 2,366.55, hit on May 16, 2022.

The agricultural solutions company provides innovative solutions and technologies for crop protection and plant nutrients. It operates in four key business segments -- agri inputs, fine chemicals, custom synthesis and biotechnology.

Meanwhile, Indian equity benchmarks traded higher in afternoon trade today, led by strong gains in technology, state-owned lenders, metals, automobile and energy stocks.

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