PI Industries (Reduce)

Target: ₹3,067

CMP: ₹3,595.85

We have analysed the samples sent to clients over the last 20 quarters to gauge the product pipeline of PI Industries. Out of 84 products, 57 are agrochemicals, while the others have general chemical applications. Interestingly, PI Industries has sent some chemical samples that can be used as intermediates for antipsychotic drugs. Most of the chemical samples with non-agrochemical applications were sent in early FY21 or FY22 and are yet to be commercialised.

Among the commercialised chemicals, the market appears to be quite bullish on fluindapyr, a fungicide for soybean, rice, and cereals developed by FMC.

Please note that fluindapyr is a pre-emergent SDHI fungicide and, compared to mancozeb, is 15 times costlier to use. It is highly unlikely that farmers will adopt this product on a wide scale for soybean crop in Latin America. Its use on rice crop is also extremely unlikely due to the high cost. Most of PI Industries’ new samples are in herbicides, which is a strategic move as herbicides are less likely to be impacted by the widespread adoption of gene editing.

However, this segment alone cannot provide the much-needed growth for the company’s top line and bottom line. The stock is becoming ex-growth, and EPS is likely to remain flattish over the next couple of years. We retain our Reduce rating on the stock