P.I.Industries demonstrates profitable growth

28-05-2014 • About P.I.Industries ($PIIND) • By InTwits

P.I.Industries is a fast-growing stock in Agrochemicals industry. It showed noticeble revenue performance in the last years among with attractive profitability and financial model.

Growth story

P.I.Industries showed growth in the last financial year. The company's revenue surged on 38.9% in FY2014. In addition to revenue P.I.Industries also keeps delivering EBITDA growth. It was 62.2% in FY2014

In the last 3 years the company showed fast revenue growth of 30.5% from FY2011 to FY2014 annually. EBITDA surged on 38.2% from FY2011 to FY2014 annually.

P.I.Industries ($PIIND) financials for the last 5 years

mln. INR	FY2010	FY2011	FY2012	FY2013	FY2014
Revenue	23,812	7,177	8,770	11,484	15,955
Revenue growth, %		-69.9%	22.2%	31.0%	38.9%
SG&A, %
EBITDA	842	1,115	1,493	1,814	2,942
EBITDA growth, %		32.5%	33.9%	21.5%	62.2%
EBITDA margin, %	3.54%	15.5%	17.0%	15.8%	18.4%
Net Income	419	651	1,036	973	1,880
Net Income margin, %	1.76%	9.07%	11.8%	8.48%	11.8%

CAPEX	362	971	1,178	1,510	645
CAPEX/Revenue, %	1.52%	13.5%	13.4%	13.2%	4.04%
Debt	1,782	2,383	2,468	2,172	1,223
Cash	19	42	57	82	350
Net Debt/EBITDA	2.1x	2.1x	1.6x	1.2x	0.3x

ROIC, %	20.2%	22.4%	23.9%	22.5%	31.3%
ROE, %	36.8%	38.3%	39.0%	22.7%	30.7%

Profitability and return on investment

Margin expansion supported EBITDA growth. EBITDA margin surged on 2.60 pp from 15.8% to 18.4% in FY2014. In the longer period the company showed fast EBITDA margin growth of 2.90 pp from 15.5% in FY2011 to 18.4% in FY2014.

P.I.Industries shows attractive ROIC at 31.3% for the last 12 months which assumes stable development model. During the last three years it surged - it was 22.4% in FY2011. Average ROIC for the last three years was 25.9%.

P.I.Industries's Net Income margin surged on 3.30 pp from 8.50% to 11.8% in FY2014. If we look for the longer period Net Income margin surged on 2.70 pp from 9.10% in FY2011 to 11.8% in FY2014.

P.I.Industries operates at ROE of 30.7%. It's average level of ROE for the last three years was 30.8%.

Capital expenditures (CAPEX)

In FY2014 the company had CAPEX/Revenue of 4.04%. The company's CAPEX/Revenue dropped on 9.49 pp from 13.5% in FY2011 to 4.04% in FY2014. It's average level of CAPEX/Revenue for the last three years was 10.2%.

Leverage (Debt)

The company has low debt level at 0.3x Net Debt/EBITDA - at the same time with high growth. If we look for the longer period the company's leverage dropped on 1.80x from 2.10x in FY2011 to 0.30x in FY2014.

Valuation vs. comparable companies

The market closed today at 15.0x EV/EBITDA for P.I.Industries which is 5.96% lower than 16.0x Agrochemicals peer group avearge calculated on the basis of 39 companies. At the end of trading day today P.I.Industries traded at 23.1x P/E which is 25.2% lower than 30.8x Agrochemicals peer group avearge calculated on the basis of 9 companies.

For capital intensive compnanies it's worth taking a look at EV/(EBITDA-CAPEX) multiple. The market closed today at 19.3x EV/(EBITDA-CAPEX) for P.I.Industries which is 314% higher than 4.7x Agrochemicals peer group avearge calculated on the basis of 6 companies.

Management team

P.I.Industries is headed by Mayank Singhal as a CEO.

Peers in Agrochemicals

Below you can find P.I.Industries benchmarking vs. other companies in Agrochemicals industry. It's shown for the period of 5 years for the key financial metrics. Each table has median value for all the companies in the industry together with individual financial data of the top-5 companies in the industry by particular financial metric.

Top companies by Revenue growth, %

Top
	FY2010	FY2011	FY2012	FY2013	FY2014
Rallis India ($RALLIS)		-52.0%	17.4%	14.4%	19.8%

Median (1 company)		-52.0%	17.4%	14.4%	19.8%
P.I.Industries ($PIIND)		-69.9%	22.2%	31.0%	38.9%

Top companies by EBITDA margin, %

Top
	FY2010	FY2011	FY2012	FY2013	FY2014
Rallis India ($RALLIS)	7.1%	18.2%	16.2%	14.7%	15.2%

Median (1 company)	7.1%	18.2%	16.2%	14.7%	15.2%
P.I.Industries ($PIIND)	3.5%	15.5%	17.0%	15.8%	18.4%

Top companies by CAPEX/Revenue, %

Top
	FY2010	FY2011	FY2012	FY2013	FY2014
Rallis India ($RALLIS)	4.5%	12.1%	4.5%	3.2%	3.4%

Median (1 company)	4.5%	12.1%	4.5%	3.2%	3.4%
P.I.Industries ($PIIND)	1.5%	13.5%	13.4%	13.2%	4.0%

Top companies by ROIC, %

Top
	FY2010	FY2011	FY2012	FY2013	FY2014
Rallis India ($RALLIS)	29.5%	32.6%	26.3%	25.3%	28.3%

Median (1 company)	29.5%	32.6%	26.3%	25.3%	28.3%
P.I.Industries ($PIIND)	20.2%	22.4%	23.9%	22.5%	31.3%

Top companies by Net Debt / EBITDA

Top
	FY2010	FY2011	FY2012	FY2013	FY2014
Rallis India ($RALLIS)	-0.0x	0.5x	0.7x	0.1x	0.2x

Median (1 company)	-0.0x	0.5x	0.7x	0.1x	0.2x
P.I.Industries ($PIIND)	2.1x	2.1x	1.6x	1.2x	0.3x

P.I.Industries stock price chart

P.I.Industries financials

mln.	FY2010	FY2011	FY2012

Revenue	23,812	7,177	8,770
EBITDA	841.8	1,115	1,493
Net income	419.0	651.0	1,036
CAPEX	361.9	971.0	1,178
Debt	1,782	2,383	2,468
Cash	19.397	42.054	56.791

About P.I.Industries

PI Industries Limited is engaged in the agri-input and custom synthesis businesses in India and internationally. It offers plant protection products, and specialty plant nutrient products and solutions in the areas of insecticides, fungicides, and herbicides; plant nutrients; specialty fertilizers; and hybrid seeds. The company also produces and markets branded generic agri input products, such as profenofos, ethion, and phorate. In addition, it is involved in the custom synthesis and contract manufacturing of agro-chemicals, pharma intermediates, and other fine chemicals. The company offers custom synthesis services in the areas of contract research, process development, analytical method development, synthesis of high purity product and impurities for analytical reference standards, 5 batch analysis under GLP conditions, scale up studies, process detailed engineering, and commercial scale production. PI Industries Limited distributes its products through distributors, direct dealers, and retail points. The company was formerly known as Mewar Oil & General Mills Ltd. The company was incorporated in 1947 and is based in Gurgaon, India. PI Industries Limited is a subsidiary of Parteek Finance & Investment Company Ltd.