PI Industries surges 8%, hits all-time high on strong Q2 revenue growth

Shares of PI Industries hit an all-time high of Rs 3,554.25 as they surged 8 per cent on the BSE in Wednesday’s intra-day trade after the company reported a strong 31 per cent year-on-year (YoY) revenue growth at Rs 17,700 crore for the quarter ended September 2022 (Q2FY23). Higher revenue growth was led by stellar performance from CSM (exports) segment. Profit after tax jumped 46 per cent YoY at Rs 334.80 crore.

At 09:40 am, PI Industries traded 7 per cent higher at Rs 3,536, as compared to 0.16 per cent rise in the S&P BSE Sensex. The stock of pesticides & agrochemicals company surpassed its previous high of Rs 3,505, hit on September 1, 2022. In the past one month, PI Industries has outperformed the market by surging 17 per cent, as against 5.4 per cent gain in the benchmark index.

Analysts believe overall growth was mainly led by volume scale up and price hike while favourable product mix and currencies would also have contributed to growth.

The company’s earnings before interest, taxes, depreciation, and amortization (EBITDA) margin during the quarter under review was up 284 bps YoY (up 157 bps QoQ) to 24.4 per cent on account of favorable product mix and operating leverage. The company is confident of delivering 20 per cent plus revenue growth with continued improvement in margins and returns in FY23.

ICICI Securities believes traction in new inquiries in CSM exports coming from non-agri chemical space along with volume growth in existing CSM products and launched on new molecule must have boosted topline growth in Q2FY23.

The brokerage firm believes the management’s guidance on delivering 20 per cent plus revenue growth in FY23 with continued improvement in margins and returns is likely achievable. Further, capex of Rs 500 crore in FY23 has been guided by the management in previous conference call will aid topline growth in future, ICICI Securities said in a note.

Technical View

Bias: Positive

Target: Rs 3,635; Rs 3,800

Support: Rs 3,500

PI Industries has surged nearly 21 per cent in the last four weeks, after the stock tested support at its 20-WMA (Weekly Moving Average). Currently, the stock is seen testing hurlde at its higher-end of the Bollinger Bands on the weekly chart at Rs 3,598, which also corresponds with the higher-end of the Bollinger Bands on the monthly chart.

The stock needs to close and sustain above the Rs 3,600-level on a consistent basis for further gains. On the upside, the stock can jump to Rs 3,635, above which the next target would be Rs 3,800, indicates the quarterly Fibonacci chart.

On the daily scale, the stock has near support at Rs 3,500-level, which can be tested in case of consolidation. The key momentum oscillators, both, on the daily and weekly charts are favourble. 

(With inputs from Rex Cano)