PI Industries -- Research Note + Q3FY13 Concall Takeaways -- Niche Company with Order Book of 1650 cr. seems -- Poised for Significant Rerating -- Views Invited

[mahesh i. shah]

Attached is a 39-pages Research Note on PI Industries Ltd. [ NSE – PIIND ; BSE – 523642 ], India's Only CSM Company focussing on Patented Molecules Having Exclusive Supplier Status for Global Agrochemical MNC Clients..

The company needs thoughtful consideration by any serious fund manager because of its consistent 26 % + RoE & 20 % + RoCE each year since last 4 years as also an exceptional growth track-record wherein company has increased its Sales at 5 Years' CAGR of 22.52 % and PAT at 5 Years CAGR of 77.46 %.

Spotless Image in exhibiting High Corporate Governance Standards with presence of vice president ICICI Foundation, ex-CEO Bayer Crop, ex-MD Rallis & Co-Chairman CII National Council on Agriculture in its Board as also 3 years visibility of 25 % + p.a. Revenue growth with improving margins because of commencement of Jambusar Project as also Launch of Innovative Product 'Dinotefuran' in Indian Market are the key aspects which make this company hard to ignore by any prudent fund manager.

Reasonable Scale of Operations at INR 1108 cr. (FY13e) with an Order-Book of ~INR 1650 cr. and Entry of Strong Investors like globally renowned VC firm Sequoia Capital, FIIs Citigroup, JP Morgan & FI ICICI Prudential who together hold 24.28 % equity of the company and have invested in the company in the span of last one year at a price which is very near to Current Market Price provide a great downside safety.

Inspite of all the Business Parameters ruling at their Historical Best, the company trading at Historically Lowest Commanded Valuations make the company an attractive opportunity to give serious thought on.

Views are Invited from fellow members on this promising Indian Research Oriented Story.

Rgds.

Mahesh

 

 

 

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Contents of this Note :

Key Investment Arguments In Favour & Against PI Industries Ltd.

( PI Industries Ltd. - Mcap – Rs. 1715 cr. with FY13e Revenues of Rs. 1108 cr. ) Page 3-4

Why it Deserves to be a Part of One's Core Portfolio

Unique Business Model ( 25 % + p.a. Revenue Growth Visibility till FY16 ) 3, 5 & 10 Years' CAGR ( Revenue, EBITDA, PAT, Fixed Assets, Debt, Equity ) Last 5 Years' Key Parameters ( RoE, RoCE & Debt-to-Equity ) Last 10 Fiscals Performance & Profitability Metrics ( YoY Growth in Sales w.r.t. Assets & EBITDA & PAT Margins ) High Corporate Governance Standards ( Distinguished Board with Great Business Acumen ) Promising Product Launch -- OSHEEN ( Direct INR 350 cr. Cross-Selling Opportunity ) Debt & Interest Expenditure Analysis of Past Decade ( Debt/Assets, Debt/Sales, Debt/EBITDA, Debt/PAT, Int./Sales, Int./EBITDA ) Segmentwise Peer Comparison ( YoY Revenue Growth, Product Portfolio, etc. ) Peer Valuations ( EV/EBITDA, EV/PAT ) Scarcity Premium Completely Missing ( Equity Capital History, Major Shareholding Structure ) Trading at Historically Lowest Valuations Conclusion ( Concerns Abating – Time to Have a Serious Relook ) Final Verdict ( A Promising Company on Verge of Significant Rerating ) Key Monitorables

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