PI Industries, a leading agrochemical company, is facing challenges in its growth trajectory due to slower sales of its key molecule, pyroxasulfone. The innovator of pyroxasulfone, Kumiai Chemical, has revised its revenue guidance downwards, leading to a potential loss of up to ₹200 crore for PI Industries.
Despite launching and scaling up some off-patented agrochemical active ingredients, PI Industries is struggling to offset the revenue impact from pyroxasulfone. The company’s revenue growth guidance has been revised downwards from 20% to 9-10% for FY25. This indicates a challenging road ahead for PI Industries in terms of revenue generation.
To mitigate the impact of slowing sales of pyroxasulfone, PI Industries has been exploring options such as acquiring companies in the agri-space, developing new patented molecules, and ramping up existing molecules in its portfolio. The company has also made strategic acquisitions in the pharma sector, which are expected to contribute meaningfully over the next couple of years.
Considering the concentration risk and lower visibility on scaling up newer patented molecules, we have revised our target price for PI Industries to ₹3,650, with a reduce rating. Investors should monitor the company’s efforts to diversify its revenue streams and mitigate the impact of slowing sales of pyroxasulfone on its overall performance.
