PI Industries defies global odds with remarkable Q2 growth and new product launches

PI Industries Limited has reported stable performance for the quarter ending September 30, 2024, demonstrating growth despite weak global cues. The company’s revenue increased by 5% year-on-year, driven by healthy growth in exports and new product launches, despite a subdued domestic market.

PI Industries reported a consolidated revenue of Rs. 22,210 million for the second quarter, a 5% increase compared to the same quarter last year. The company attributed this growth mainly to its export business, which saw a surge in agrochemical exports, bolstered by the successful launch of new products. The gross margin improved significantly to 52%, representing an increase of 519 basis points year-on-year. The company also witnessed a rise in EBITDA by 14% to Rs. 6,289 million, which contributed to a 6% growth in net profit at Rs. 5,082 million.

Q2 Highlights: Growth Led by Exports

The export revenue in the agrochemical sector registered a growth of 10%, primarily propelled by new product launches and an increased volume of existing products. The company’s aggressive push for commercializing four new products within this period contributed heavily to this positive trend, with new product exports rising by 42% year-on-year.

However, the domestic market did not perform as well, with a 5% decline year-on-year. The company cited reduced supply to institutional customers as a significant factor. Despite this, domestic branded products managed to grow by 7%, and biological products saw a growth of 18%, demonstrating some resilience in the domestic portfolio.

Strategic Initiatives and New Acquisitions Boosting Long-Term Growth

PI Industries continued its strategic expansion with the completion of its acquisition of Plant Health Care, a global biological company. This acquisition is expected to enhance PI Industries’ competitive edge in the global biologicals space, allowing the company to further integrate environmentally friendly technologies into its product offerings.

In line with its strategic vision, the company is focused on enhancing its product mix with sustainable agricultural solutions. PI Industries is banking on its PREtec technology platform—a peptide-based innovation—that has demonstrated environmental friendliness and effectiveness in stimulating crop growth while resisting various stresses. The PREtec technology has already gained significant traction in key markets such as the United States, Brazil, and Europe, and is expected to drive future revenue growth.

Rising Gross Margins Amid Cost Challenges

The company reported an increase in overheads by 20%, attributed to scaling up exports and promotion expenses for launching new products and expanding the Pharma business. Despite these cost escalations, PI Industries managed to enhance its profitability, supported by operational efficiency and improved product mix, which bolstered its gross margin to 52% compared to 47% in Q2FY24.

The pharmaceutical division, PI Health Sciences Ltd. (PIHSL), also contributed to the revenue, although with a lower margin, reflecting its growth potential. The pharma exports segment generated Rs. 411 million in Q2, contributing approximately 2% of total export revenue. The company is working on expanding this segment by focusing on commercialization and strategic partnerships.

Driving Growth Through Sustainable Practices

PI Industries remains committed to sustainable agriculture, with a strong portfolio of biological products. These solutions not only contribute to reducing the environmental impact but also provide value-added benefits to farmers, especially in regions facing challenges from traditional agricultural methods. PI Industries completed the commercial launch of four biological products during the quarter.

The company’s strong emphasis on research and development continues to pay dividends, with over 13 patents filed in the first half of FY25 alone. The company operates state-of-the-art research labs in Udaipur, Hyderabad, Jaipur, and Lodi, working on various innovative solutions to create a sustainable future for agriculture.

Outlook: Expecting High Single-Digit Revenue Growth

Despite global economic uncertainties, PI Industries remains cautiously optimistic about the second half of FY25. The company expects a high single-digit revenue growth rate, propelled by continued momentum in export sales and the introduction of new products across different categories. With elevated inventory levels gradually normalizing and global demand rebounding, the company is gearing up for a better performance in the next quarter.

Expert Opinion: Navigating Global Challenges with Strategic Acumen

According to Rajnish Sarna, Executive Director of PI Industries, the company’s strategic focus on export expansion and innovative product launches has allowed it to navigate challenging global conditions effectively. Sarna noted that while domestic market challenges persist, the company’s commitment to biological products and sustainable solutions positions it well for future growth.

“We remain committed to strengthening our portfolio through sustainable products and new technological innovations. Our recent acquisition of Plant Health Care is an essential step toward expanding our leadership in sustainable agriculture. We are also working on optimizing our operations to meet the rising global demand while maintaining profitability,” Sarna commented indirectly.