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News: PI Industries reported top-line growth of 12.2% YoY to ₹ 1565.6 crore (vs. I-Direct estimate of ₹ 1698.6 crore), largely led CSM (Exports) segment. We believe overall growth was mainly led by orderbook execution in the CSM even as the domestic agrochem segment remained laggard. Gross margin increased marginally by 75 bps YoY and de-grew by 233 bps QoQ to 44.8%. EBITDA margin remain flat YoY and de-grew by 384 bps QoQ to 21.9% (vs. I-direct estimate of 25.9%). Absolute EBITDA stood at ₹ 342.8 crore (vs I-Direct estimate of ₹ 439.3 crore) up 12% YoY. Finally, PAT came in at Rs 280.6 crore, up 37% YoY (vs. I-direct estimate: Rs 358.9crore) tracking lower top-line growth.
Views: We believe decline in prices of products and high volatility in raw material prices along with inventory piling up at customer’s end might have impacted the margins and demand in Q4FY23. For FY23, the revenue grew by 22.5% YoY which surpassed management guidance of 20% plus growth issued at the beginning of the year. With strong CSM order book of ~US$ 1.8 billion and a proposed foray into pharma CDMO, the focus has been heavily tilted towards global outsourcing opportunities. That said, the domestic agrochem business remains lumpy and can influence the overall performance as is visible in the current quarter.
Impact: Negative