🔍 At a Glance
PI Industries has quietly built an empire in the agrochemical and custom synthesis (CSM) world, becoming the brainy cousin in a family of fertilizer bros. With exports driving over 70% of revenues and operating margins hitting 25%+, PI has scaled like a biotech firm without the biotech drama. But has growth slowed post-COVID? And are debtor days hinting at deeper issues?
Let’s unpack the PI potion.
📊 5-Year Financial Snapshot
| FY | Revenue (₹ Cr) | Net Profit (₹ Cr) | OPM % | ROCE % | EPS (₹) | Dividend (₹) |
|---|---|---|---|---|---|---|
| 2021 | 4,577 | 738 | 22% | 22% | 48.7 | 4.9 |
| 2022 | 5,300 | 844 | 22% | 17% | 55.6 | 6.2 |
| 2023 | 6,492 | 1,230 | 24% | 22% | 81.0 | 10.0 |
| 2024 | 7,666 | 1,682 | 26% | 24% | 110.8 | 15.3 |
| 2025 | 7,978 | 1,660 | 27% | 23% | 109.4 | 16.4 |
📈 Revenue CAGR (5Y): 14%
📈 PAT CAGR (5Y): 18%
🎯 OPM expanded from 22% to 27%
📉 TTM growth slowed — just 4% YoY
⚠️ Growth fatigue? Or just digesting capacity?
🧪 Business Model: The Two-Beaker Strategy
- Custom Synthesis & Manufacturing (CSM)
- ~70–75% of revenue
- Global contracts for innovators (non-generic)
- IP-sensitive, long gestation R&D
- High EBITDA margins (~30%)
- Domestic Agri Inputs
- Branded products like Osheen, Nominee Gold
- Distribution-heavy, lower margin
- Good cross-sell with farmer network
🏭 Quarterly Results – FY25 Recap
| Quarter | Revenue (₹ Cr) | OPM % | Net Profit (₹ Cr) | EPS (₹) |
|---|---|---|---|---|
| Q1 | 2,069 | 28% | 449 | 29.6 |
| Q2 | 2,221 | 28% | 508 | 33.5 |
| Q3 | 1,901 | 27% | 373 | 24.6 |
| Q4 | 1,787 | 25% | 330 | 21.8 |
📉 Sequential degrowth
📈 OPM steady — cost control solid
⚠️ Flat earnings despite capex additions
🔬 Balance Sheet Biryani
| Metric | FY25 |
|---|---|
| Net Worth | ₹10,157 Cr |
| Borrowings | ₹184 Cr (minimal) |
| ROCE | 23% |
| Working Capital Days | 127 (!!) |
| Cash Flow from Ops | ₹1,413 Cr |
| Cash Flow from Investing | ₹-1,424 Cr (aggressive capex) |
🚨 Working capital jumped from 53 → 127 days
➕ Capex = ₹847 Cr in FY24 → ₹1,300+ in FY25
🧠 Investing ahead of growth, but efficiency dip?
🔍 Shareholding Snapshot (Mar 2025)
| Category | % Holding |
|---|---|
| Promoters | 46.09% (steady) |
| FIIs | 18.06% (down from 20%) |
| DIIs | 27.43% (rising) |
| Public | 8.28% (shrinking) |
📉 Retailers reducing exposure
📈 DIIs accumulating quietly
🧠 Valuation: Chemical Compounding or Bubble Brew?
| Metric | Value |
|---|---|
| CMP | ₹4,172 |
| EPS (TTM) | ₹109.4 |
| P/E | 38.1x |
| Book Value | ₹669 |
| P/B | 6.2x |
| Dividend Yield | 0.36% (eh.) |
Peer Check:
| Peer | P/E | ROCE | OPM | Yield |
|---|---|---|---|---|
| PI Industries | 38x | 23% | 27% | 0.36% |
| Sumitomo Chem | 49x | 25% | 20% | 0.18% |
| Bayer Crop | 45x | 24% | 22% | 2.5% |
| Dhanuka | 26x | 28% | 18% | 0.12% |
| Sharda Cropchem | 24x | 16% | 12% | 0.37% |
🔍 PI = Premium for R&D, CSM
🔋 Justified — but future growth needs to accelerate
📊 EduInvesting Fair Value – Calculated, Not Manifested
Method 1: Reasonable P/E
- EPS: ₹109
- Assign P/E range: 28x – 34x
🎯 FV Range = ₹3,050 – ₹3,700
Method 2: ROCE + Growth Matrix
- ROCE: 23%, Profit CAGR: ~18%
- Premium justified — 5–5.5x Book
🎯 FV = ₹669 x 5.0 – 5.5 = ₹3,345 – ₹3,680
✅ Final Fair Value Range = ₹3,050 – ₹3,700
📌 CMP = ₹4,172
⚠️ Trading at 13–37% premium
🧠 TL;DR
✅ R&D-led moat with 70% exports
✅ CSM contracts = high margin + sticky revenue
✅ Aggressive capex, healthy balance sheet
❌ Working capital bloated
❌ Growth slowed, FY25 profit flat YoY
❌ Valuation stretched above 35x PE
🧬 EduInvesting Verdict
PI Industries is the Schrödinger’s Stock — both a multibagger and overvalued at the same time.
You’ll either:
- 💰 Be rewarded for patience (like those who trusted Divi’s in 2015), or
- 🐌 Be stuck in sideways limbo till earnings catch up.
Until the next molecule drops…
✍️ Written by Prashant | 📅 18 June 2025
Tags: PI Industries, Agrochem, CSM, Custom Synthesis, Chemical Stocks, ROCE Leaders, EduInvesting Fair Value
