Stock that gave 1,200 times return in 13 years

PI Industries' order book is more than twice last year's sales

Meet PI Industries, an agrichemicals maker ranked 175th by market value among listed companies in India. Or the stock that would have multiplied your capital more than 1,200 times in the 13 years through the end of December.

The Gurgaon, northern India-based company has delivered positive returns every year since 2003, the longest streak in Asia, transforming itself from another penny stock into an enterprise with multiple manufacturing plants and a research-and-development centre, employing nearly 1,600 people. Now, Managing Director Mayank Singhal plans to take the growth story further.

PI, which develops and makes pesticides by licensing patents owned by its global partners such as BASF SE, Syngenta AG and Dow Chemical Co, expects earnings to grow about 20 percent annually for the next five years, according to Singhal. While the demand for chemicals used to protect crops is dependent on agricultural output and fickle weather, an expanding product portfolio has boosted PI's order book to $650 million, more than twice its sales in the financial year ended March 2015.

"We are confident that we will be able to grow our order book from $650 million at a steady clip," Singhal, 42, who's also a member of PI's controlling shareholder family, said in an interview. "We are focusing on expanding our knowledge and technology capabilities. This will enhance our operating leverage and margins."

PI's shares closed at Rs 649.05 on December 31, compared with Rs 0.53 on the same date in 2002, capping a 13-year streak of annual gains. That's the longest for Asian firms with more than $250 million in capitalisation and matches an equally long stretch by Nestle Malaysia Bhd, whose stock climbed 267 perc ent during the period.

PI reported record net income of Rs 246 crore ($37 million) in the year ended March 31. The stock is valued at 25.5 times its projected 12-month earnings, compared with 17.1 times for the S&P BSE MidCap index. Among its industry peers, India's UPL trades at a multiple of 11.5 and shares of Switzerland's Lonza Group AG are priced at 20.5 times. While PI is "one of the best plays" in the agrichemicals industry because of its capital efficiency, a balance sheet with little debt and robust growth outlook, the company is exposed to risks from the vagaries of Indian monsoon rains and a decline in farmers' incomes, according to Niket Shah, an analyst at Indian brokerage Motilal Oswal Securities Ltd.