Major Agrochemical manufacturer PI Industries declined 10 percent in the day’s trade. investors are confused as to what has caused the stock to fall unexpectedly, this is why.
On December 12, 2023, the shares of PI Industries slipped 10 percent after speculations came out that a Chinese company has entered the Pyroxasulfone segment and China has major plans for the expansion of Pyroxasulfone.
According to Statista’s 2022 report, China exported over 1.3 million tons of herbicides, making it the largest type of pesticide exported from China in terms of volume
Shandong Weifang Rainbow Chemical Co., Ltd. a Chinese company (Rainbow Agro) received approval to construct a Pyraxolesulfone project on December 8, 2023, with an annual production capacity of 2,000 tons in China. Rainbow Agro is a leading crop protection company that produces, distributes, and markets crop protection products
As per reports, Pyroxasulfone contributes to ~50 percent of its Pi Industries CSM revenue (custom synthesis and contract manufacturing of chemicals), it contributes to ~35-38 percent of its total revenue, and PI industries generate 80 percent of its total turnover from exports.
We see that PI Industries currently has a lot of dependence on Pyroxasulfone and most of its turnover comes from exports. With the entry of a new player in foreign markets and China’s expansion plans, PI Industries may see a dip in its exports and take a hit on its financials.
Pyroxasulfone is a pre-emergence herbicide that inhibits the production of very long-chain fatty acids in plants, used to control a wide range of annual grassweeds, sedges, and annual broadleaf weeds.
Pi Industries revenue from operations grew 22.5 percent from Rs. 5,299.5 Crores in FY22 to Rs. 6,492 Crores in FY23, accompanied by increasing profits of Rs. 843.8 Crores to Rs. 1,229.5 Crores.
PI Industries Limited is a leading player in the agro-chemicals space having a strong presence in both Domestic and Export markets. It operates through 2 segments namely Agchem exports and domestic agri brands.
Written by: Bharath K.S
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