Target: ₹4,143
CMP: ₹3,787.45
In Q1 FY26, PI Industries Ltd (PIIL) registered a revenue degrowth of 8 per cent on a y-o-y basis, on account of muted exports in CSM division and subdued biological products sale due to ongoing regulatory hurdles in the domestic business.
The expansion in gross margin of 565 bps on a y-o-y basis was completely driven by a better product mix and cost optimisation. However, this increase was offset by higher employee and operating costs leading to a dip in EBITDA margin of 88 bps on a y-o-y basis, though still above the guided range of 25-26 per cent.
Given the challenging macro environment, the company continues to stick to its single digit topline guidance for FY26. The PIHSL division posted revenue growth of 186 per cent on a y-o-y basis and the management remains confident on achieving EBITDA breakeven in 12-18 months.
While the company is making progress on diversification, strengthening its domestic portfolio, and scaling its pharma vertical. However, near-term challenges in the agrochemical business and regulatory uncertainties in biologicals could weigh on performance. Therefore, based on our revised estimates, we change our rating from Buy to Neutral on PI Industries Ltd, with a target price of ₹4,143 (~38.5x FY26E EPS).
Published on August 26, 2025
