PI Industries Stock Idea By Sharekhan

A differentiated business model and compounding growth story: PI has a unique business model, strong relationship with global innovators, good revenue visibility in the CSM business and a well-spread distribution network, making it a compelling investment case. PI is one of the few agro-chemical companies that have a unique business model and are an example to the other chemical companies. On the valuation front, PI continues to attract a premium valuation over the other agro-chemical companies on account of its unique business model, strong visibility of earnings, robust balance sheet (to be debt-free by FY2017), impressive return ratios with strong free cash flows and excellent management. Currently, PI trades at PE of 23.2x FY2017E and 19.2x FY2018E earnings. We have valued the company at 25x FY2018E earnings. We initiate coverage on PI with a Buy recommendation and price target of Rs 800.

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