PIIND - PI Industries Limited Share Price

In the earnings conference call for Q1 FY26, management provided a cautiously optimistic outlook for the company. They anticipate continued challenges in the global AgChem industry due to low commodity prices, farm income volatility, high interest rates, and geopolitical uncertainties. However, management mentioned a gradual destocking of inventories and a shift in strategy towards "China Plus One" which could create opportunities moving forward.

For the second half of FY26, management expects an acceleration in business, with AgChem exports poised to benefit from new process technologies. They are planning to introduce 6 to 7 new molecules, backed by a growth of 46% year-on-year from products commercialized in the last three years. The domestic market is projected to grow 6%, despite temporary regulatory disruptions in biologicals.

The pharma segment has seen an impressive 186% year-on-year revenue growth, attributed to strengthened relationships with biotech and big pharma. Management noted planned capital expenditures of approximately Rs. 700 crore to Rs. 800 crore this fiscal year to support growth engines across various segments, including Ag science and Health sciences.

One significant highlight is the registration of PIOXANILIPROLE, India's first discovery product, which opens new market opportunities estimated in the multi-thousand crore range. Management reaffirmed a target for single-digit revenue growth in FY26, maintaining an EBITDA margin of 25%-27%.

Overall, they appear confident in their ability to navigate current challenges while continuing to invest in strategic growth initiatives, with a focus on sustaining long-term growth opportunities across multiple platforms.

Here are the major questions and detailed answers from the Q&A section of the earnings transcript:

1. Question: "Can you give us some sense on the applicability of tariff on our key product in the US, as well as other products?"

   Answer: "The tariff scenario is evolving, and currently, it is not applicable to our products. We do not foresee any immediate challenges regarding this matter."

2. Question: "What is the update on our registration of our key product in Brazil, pyro?"

   Answer: "We are a contract manufacturer for this product, and it has already been registered in Brazil. Our supplies are to a customer who, in turn, may supply to Brazil."

3. Question: "When can we expect normalization of biological sales in India?"

   Answer: "Normalization is dependent on governmental and legal resolutions. We need clarity from these authorities, and while we wish it could happen immediately, it may take some time."

4. Question: "Are we evaluating inorganic opportunities in the Indian market to boost our domestic business?"

   Answer: "Yes, we are actively looking at various inorganic opportunities across our different business segments."

5. Question: "Regarding gross margins, would you update your guidance range given the strong performance?"

   Answer: "We'll stick to our initial guidance. The margins depend on product mix and efficiencies from our operating teams, which can vary each quarter."

6. Question: "What is the current order book number?"

   Answer: "Our order book stands at approximately $1.2 billion, and for Plant Health Care, revenue for the quarter is around $3 million to $4 million."

7. Question: "Why did the trade receivables increase this quarter?"

   Answer: "The increase is due to industry-wide inventory levels and some delays in our collections. However, we do not foresee any concerns regarding recovery."

8. Question: "What percentage of revenue currently comes from the biological business?"

   Answer: "Currently, the biological business contributes about 20% of our revenue, but it has been zero for the ongoing quarter due to regulatory stoppages."

9. Question: "When will the two MPPs be operational?"

   Answer: "One plant is expected to start in Q4 of this year, while the other will likely be operational in early next year, with ramp-up taking 3-4 years."

10. Question: "What is the guidance for CAPEX and tax rate for FY26?"

    Answer: "We expect our CAPEX to be between Rs. 700 crore to Rs. 800 crore, and the tax rate is projected at around 22%-23%."

These answers reflect the evolving nature of the company's operations and provide insight into both current challenges and future prospects.