PI Industries Ltd.
Q1 FY26
Call date · August 13, 2025
1 · Management Commentary
Key Positives
- Domestic business grew 6% YoY in Q1 FY26, supported by favorable monsoons and strong product portfolio.
- Pharma business revenue grew 186% YoY, with strong traction in new business inquiries and client additions.
- Gross margin expanded to 57.4% (up 5.7% YoY); EBITDA margin resilient at 27.5%.
- New products commercialized in the last three years registered 46% YoY growth; 6–7 new molecules to be commercialized in the remaining quarters.
- Electronic and specialty chemicals segment gained traction and scale.
- Filing of India’s first discovery molecule, PIOXANILIPROLE, marks a significant innovation milestone.
Key Negatives
- Overall revenue declined 8% YoY due to AgChem export softness and regulatory disruptions in biologicals.
- Biologicals segment in India impacted by abrupt regulatory challenges, leading to temporary sales stoppage (~20% of domestic revenue).
- Trade working capital days increased to 91 from 73 (March 2025), mainly due to export segment.
- Uncertainty persists due to US tariff situation and ongoing regulatory issues in biologicals.
Forward Guidance
- Capex of Rs. 700–800 crore planned for FY26.
- 6–7 new AgChem molecules to be commercialized in H2; 3 additional domestic products to be launched during the year.
- Pharma business expected to deliver 75% revenue growth in FY26 with improved margins; 2 MPPs to be operational by Q4 FY26 and Q1/Q2 FY27.
- Single-digit revenue growth for FY26 with sustained EBITDA margin; H2 expected to drive acceleration.
- Continued investments in pharma, global biologicals, and R&D; focus on scaling up electronic chemicals and specialty segments.
- Strategic initiatives include S4 HANA implementation, global supply chain integration, and business process reengineering.
2 · Q&A Highlights
Q 1 (Composite): What is the impact and outlook regarding US tariffs on key products?
A (Management):
• Tariff scenario is evolving; currently not applicable to PI’s products and no challenges seen at present.
• Uncertainty remains, but opportunity may arise if situation settles.
Q 2 (Composite): Update on regulatory issues and normalization timeline for biologicals in India.
A (Management):
• Resolution depends on government/court; industry expects issue to be resolved in the next month or so.
• Biologicals contributed ~20% of domestic revenue; currently sales are stopped.
Q 3 (Composite): Guidance on margins and revenue growth for FY26, especially after strong Q1 gross margin.
A (Management):
• Maintain guidance of 50–52% gross margin and 25–27% EBITDA margin; margins will vary with product mix.
• Single-digit revenue growth for FY26 expected, with H2 acceleration backed by CSM supply schedules and resolution of biologicals issue.
Q 4 (Composite): Progress and outlook for pharma business, including client additions and margin trajectory.
A (Management):
• Onboarded two large pharma clients; expect 3–4 by year-end.
• Pharma business to grow 75% in FY26 with improved margins; break-even EBITDA expected in 12–18 months.
• CRDMO platform gaining traction; leveraging CSM experience for faster pharma growth.
Q 5 (Composite): Commercialization and market potential for PIOXANILIPROLE and new product launches.
A (Management):
• Filed for regulatory approval in India; commercialization expected in ~2.5 years.
• Targeting row crops (sugarcane, rice, pulses, vegetables); opportunity size substantial but specifics not disclosed.
Q 6 (Composite): Details on trade receivables increase and risk of sales returns.
A (Management):
• Increase mainly from export segment and industry-wide fertilizer shortages; no major concern on recoverability or sales returns.
Q 7 (Composite): Progress in electronic/specialty chemicals and diversification efforts.
A (Management):
• 5–7 electronic chemical products commercialized; 10 projects in pipeline with global customers; segment expected to scale in 4–5 years.
Q 8 (Composite): Order book, Plant Health Care revenue, and Jivagro performance.
A (Management):
• Order book at ~$1.2 billion; Plant Health Care revenue $3–4 million for the quarter.
• Jivagro contributes 17–20% of domestic revenue; portfolio shifted to specialty products for horticulture.
3 · Other Key Numbers
- Q1 FY26 consolidated revenue: Rs. 19,005 million (down 8% YoY, up 7% QoQ)
- 3-year Q1 revenue CAGR: 7%
- Domestic business growth: 6% YoY
- Pharma business revenue growth: 186% YoY
- Gross margin: 57.4% (up 5.7% YoY)
- EBITDA margin: 27.5%
- Effective tax rate (ETR) guidance: 22–23% for next 2–3 years
- Trade working capital days: 91 (vs. 73 in March 2025)
- Net worth: Rs. 1,06,003 million
- Net cash balance: Rs. 41,554 million
- Capex guidance: Rs. 700–800 crore for FY26
- Order book: ~$1.2 billion
- Plant Health Care revenue: $3–4 million for the quarter; $8–10 million annualized
- Biologicals: ~20% of domestic revenue (currently at zero due to regulatory issue)
- Jivagro: 17–20% of domestic revenue
- Freshness index (new AgChem products): 17–18% of AgChem export business
- 2 MPPs: One to be operational by Q4 FY26, second by Q1/Q2 FY27; ramp-up over 3–4 years
- 15 molecules commercialized in last 3 years; 6–7 more to be launched in FY26