PI Industries Q4FY11 Con Call Summary: Emkay

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PI Industries Q4FY11 Con Call Summary:

We attended the conference call of PI Industries on 19th April, Tuesday.

The company reported consolidated revenues of Rs 2.1 bn (+52% YoY), PAT of Rs 204 mn (+93% YoY) in Q4 2011. For FY2011, it reported revenues of Rs 7.2 bn (+33% YoY) and PAT of Rs 651 mn (+55% YoY).

Key Takeaways from the call:

Company Specific

n    Management expects to clock 35-40% revenue growth in FY 2012. They expect sales volumes to be the main contributor of revenue growth in the coming year.

n    They expect volumes to grow by 30-32% while price realizations would support growth by 4-5% in FY2012.

n    PI Industries has been able to outperform the industry in terms of revenue growth in FY 2011. In FY 2011, company recorded sales growth of 33% while industry growth is around 15%.

n    As per the company, they have a current order book of $300mn in custom synthesis segment.

n    Both agri business & custom synthesis segment is expected to grow at 35%-40% in FY2012.

n    Management expects EBITDA margins to expand by 100-150 bps because of a favorable shift in product mix and improved operating leverage.

n    As per the company, preference shares & debentures would be converted into equity in FY2012.

n    Company’s raw material costs have been increasing for the last 3-4 months. However, in the last 2 months, it has been able to pass on the raw material cost increases to its clients.

Industry Related

n    Management expects agro chemical industry to witness strong growth ahead because of increased food requirements in the economy. They expect the industry to grow at more than 15%.

n    Further, demand for agro chemicals would continue to increase in the coming years as farmers increasingly adopt agro chemicals to boost yields. Good monsoon season would also improve the agriculture sector performance.

n    As per the company, agri commodity prices would continue to be strong supported by robust demand for food grains.

n    Management also stated that passing of raw material costs increases on to the customers is an industry wide phenomenon.