A company is said to be ‘fundamentally strong’ when it portrays a specific set of characteristics such as strong and consistently improving financials, lower leverage ratios, and many more.
Listed below is one such fundamentally strong stock associated with the ‘agrochemical’ industry that one should add to their watchlist for a potential upside of more than 30 percent:
PI Industries Limited
With a market capitalization of Rs 52,797.91 crores, the stocks of PI Industries Limited are trading at Rs 3480.00 on Wednesday, flat versus the previous closing levels of Rs 3489.80 apiece.
Coming onto the consolidated financials, the company, during the recent financial years, showed positive movements in its prime operational indicators such as the net sales as well as after-tax profits with the former increasing from Rs 5,299.5 crores during FY21-22 to Rs 6,492 crores during FY22-23, and, the latter, during the same time period, rising from Rs 843.8 crores to Rs 1,229.5 crores.
As a result of the same, the company’s basic profitability metrics of the company such as the return on equity (RoE) as well as the return on capital employed (RoCE) rose with the RoE moving up from 14.71 percent during FY21-22 to 18.45 percent during FY22-23, and, the RoCE, moving up from 17.4 percent to 21.84 percent.
Motilal Oswal, one of the well-known brokerages based in India, has given a ‘buy’ recommendation on PI Industries Limited with a target price of Rs 4,560 representing an upside of around 31 percent as compared to the current stock price levels prevailing in the markets.
The rationale behind providing such a recommendation pertains to the positive outlook the brokerage has for the “Custom Synthesis Manufacturing” (CSM) segment. Moreover, the company’s aggressive exploration of business opportunities in the Pharmaceutical sector also adds to the upside potential.
As per the latest shareholding pattern data for the quarter ended June 2023, the company’s Promoters hold a 46.08 percent stake, and Foreign Institutional Investors (FIIs) hold a considerable stake of 19.17 percent in the company.
PI Industries Limited is engaged in the business of manufacturing, distributing, and selling specialty fertilizers, agrochemicals, and seeds to the agriculture industry. The agrochemical
portfolio of the company includes products such as fungicides, insecticides, and plant health products.
Written by Amit Madnani
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