PIIND - PI Industries Limited Share Price

In the earnings conference call for Q4 FY25, management provided an optimistic outlook for PI Industries, emphasizing the long-term growth prospects despite current challenges. The key highlights include a projected mid-single digit growth for the overall business in FY26, supported by the domestic market's strong performance and new product launches.

Management reported a consolidated revenue of Rs. 17,871 million for Q4 FY25, representing a 3% increase year-over-year, and projected consolidated revenue growth for FY25 at Rs. 79,778 million, a 4% increase. Notably, domestic branded revenue surged by 21% in Q4, driven by successful launches and an increased focus on sustainable biological products, which achieved a growth rate of 20%.

A significant aspect of the management's strategic focus is the expectation of continued momentum in new products, with a 31% growth in new products year-over-year, aiming for a sustained contribution of 15-18% in the Ag-Chem export business. Additionally, management outlined plans for an ambitious 5x increase in biological revenues over the next five years, from approximately Rs. 250 crore to around Rs. 1,000 to Rs. 1,200 crore.

The EBIT margins are expected to stabilize around 25%, reflecting tight overhead management and operational efficiencies, alongside ongoing investments in capacity and capabilities in pharmaceuticals and biologicals. The effective tax rate is projected to remain in the range of 22% to 23% over the next 2-3 years. CAPEX is estimated between Rs. 800 to Rs. 900 crore for FY26, focusing on expanding manufacturing capabilities, particularly in the Pharma and CSM segments.

Overall, despite facing certain market headwinds, management is confident in PI Industries' long-term strategic direction and the robust pipeline of innovations to drive future growth.

Question 1: "What is the timeline for commercializing PIOXANILIPROLE and how much have we invested in R&D?"
As we explained, we are currently developing regulatory data and preparing applications. We expect to commercialize in the first country within the next couple of years. However, specific investment figures for R&D are confidential and not disclosed at this stage.

Question 2: "What is the contribution of new high-growth molecules in Ag-Chem CSM and biologicals for FY25?"
New products contributed approximately 15% to 18% of our Ag-Chem export business. Meanwhile, biologicals accounted for around 18% to 20% of our domestic Ag-Chem brands business.

Question 3: "What growth should we anticipate for new molecules in FY26?"
We aim to maintain a robust pipeline, with a similar trajectory as FY25. We expect 15 more products to be commercialized, thus providing strong contributions to topline growth and stable margins.

Question 4: "Why are gross margins particularly strong this quarter?"
Strong gross margins result from a favorable product mix and effective management of overheads. Although recent price adjustments occurred in the CSM sector due to cost reductions, our margins benefited from efficient operations.

Question 5: "What are the pharma EBITDA losses for FY25?"
For the full year, the pharma business EBITDA loss was in the range of Rs. 180 - Rs. 190 crore.

Question 6: "Where do biological revenues currently stand, and what is our 5-year target?"
Currently, our biological India business contributes around Rs. 250 crore. Our 5-year target is to increase it to approximately Rs. 1,000 - Rs. 1,200 crore.

Question 7: "What's the margin outlook for the pharma business?"
We expect gross margins in the pharma business to be around 60%-65%. Improving revenue will drive operating leverage and enhance profitability over time.

Question 8: "Could you clarify total CAPEX for FY26?"
We expect CAPEX in FY26 to be in the range of Rs. 800 - Rs. 900 crore, primarily focused on manufacturing improvements and growth in our pharma and biopharmaceuticals divisions.

Question 9: "What percentage of growth can we expect from exports versus domestic in FY26?"
While domestic business is projected to grow, we anticipate exports to show improvement in H2 FY26, driven by new product launches and increased demand.

Question 10: "How do you see our biological segment evolving?"
Currently focused on the domestic market, our biological segment will expand globally in 5 years, leveraging new partnerships and market opportunities. We aim for robust growth through innovative products and technologies.