Price Target: ₹3,067
Current Market Price (CMP): ₹3,595.85
An analysis of the samples sent to clients over the past 20 quarters provides insights into the product pipeline of PI Industries. Of the 84 products examined, 57 are related to agrochemicals, while the rest have general chemical applications. Interestingly, PI Industries has also sent samples of chemicals that could be used as intermediates for antipsychotic drugs. Most of these non-agrochemical samples were sent in early FY21 or FY22 and are yet to be commercialized.
One chemical that has garnered bullish market sentiment is fluindapyr, a fungicide developed by FMC for use on soybean, rice, and cereals. It is a pre-emergent SDHI fungicide that is significantly more expensive to use compared to mancozeb. As a result, widespread adoption of fluindapyr, especially on soybean crops in Latin America, is considered highly unlikely due to its cost. Similarly, its use on rice crops is also unlikely due to the financial implications.
While PI Industries is focusing on herbicides, which are less susceptible to the impact of gene editing, this segment alone may not drive substantial growth for the company in terms of revenue and earnings. The stock is perceived to be reaching a point of diminishing returns, with EPS projected to remain relatively flat over the next few years. Therefore, our rating on the stock remains at Reduce.
This article was published on January 20, 2025.
