Jefferies Maintains ‘Buy’ Rating on PI Industries Despite Valuation Concerns, Cuts Target to Rs 4,120

Jefferies Maintains ‘Buy’ Rating on PI Industries Despite Valuation Concerns, Cuts Target to Rs 4,120

Jefferies has maintained its ‘Buy’ recommendation on PI Industries, albeit with a revised target price of Rs 4,120 per share, citing valuation concerns. Despite the adjustment in the target price, Jefferies remains optimistic about the company’s prospects, underscoring key growth drivers and strategies outlined by the innovator.

PI Industries, an innovator in the agrochemical sector, has signaled a commitment to volume-driven growth in its key product for the fiscal year 2024, despite implementing a price reduction strategy aimed at safeguarding market share. Notably, the company anticipates that any reduction in the product’s price will not result in erosion, emphasizing that the AI’s cost is only a fraction of the final retail price.

However, Jefferies has adjusted its earnings per share (EPS) estimates for fiscal years 2024 and 2025, citing short-term destocking. Despite the 2% and 4% downward revision for FY24 and FY25 respectively, Jefferies projects a robust 12% EPS growth in fiscal year 2025.

Analysts at Jefferies find the current valuation of PI Industries reasonable, standing at 29 times the estimated earnings per share for fiscal year 2025. This valuation assessment suggests that, despite the adjustment in the target price, PI Industries remains an attractive investment opportunity.

The market response to Jefferies’ update has been keenly observed, with shares of PI Industries displaying resilience in the face of valuation concerns. In intra-day trade, the stock has demonstrated a gain of more than 1%, signaling a positive sentiment among investors who appear to align with Jefferies’ ‘Buy’ recommendation on PI Industries. As the company continues to navigate market dynamics and implement its growth strategies.