PI Industries Shares Drop 9% After Revenue Cut

PI Industries faced a sharp decline in its share price, dropping over 9% on November 14, 2024, following a significant reduction in its revenue growth guidance for the financial year 2025. The company had previously forecasted a 15% revenue growth, but has now lowered expectations to high single-digit growth. This adjustment reflects ongoing challenges in both domestic and global markets, affecting investor sentiment and driving a sell-off in the stock.

September Quarter Results: Modest Growth Amid Market Challenges

For the September quarter, PI Industries reported a 5% increase in revenue compared to the same period last year. Net profit also rose by 6%, indicating steady, albeit limited, financial performance. The company’s Earnings Before Interest, Tax, Depreciation, and Amortization (EBITDA) showed a 14% year-on-year increase, with an expansion in EBITDA margin by 200 basis points.

While these figures indicate some level of operational efficiency, the reduced revenue guidance suggests that market headwinds are expected to persist. Elevated inventory levels in the export market and ongoing price pressure from generic products in domestic markets have been cited as key reasons for the tempered outlook.

Sector-Specific Performance

The company’s domestic revenue witnessed a 5% decline, highlighting the impact of reduced product offtake and de-stocking trends. However, new products showed strong momentum, growing by 42% year-on-year, reflecting the company’s focus on innovation and diversification.

The pharmaceutical segment, however, faced significant challenges during the quarter. Revenue from the pharma business declined sharply to ₹41 crore, down from ₹72 crore in the same quarter of the previous year. The EBIT loss in this segment widened to ₹55 crore, a substantial increase from the ₹38 crore loss reported a year earlier. This weakness in the pharma business has contributed to the overall pressure on the company’s financial performance.

PI Industries Share Performance

As of November 14, PI Industries’ share price continued to face downward pressure, trading 5.31% lower at ₹4,210. The stock opened at ₹4,349.15 but hit an intraday low of ₹4,045.85, reflecting heightened investor concerns following the guidance cut. The current price marks a significant drop from its peak of ₹4,804, a decline of nearly 15%. Despite this correction, the stock remains up by 18% for the year, indicating that it had a strong run earlier in 2024.

Investors remain cautious as the company navigates ongoing market challenges, particularly in the export and pharmaceutical segments. The reduced revenue guidance has clearly impacted market confidence, and it remains to be seen how PI Industries will adjust its strategies to address these issues and regain investor trust.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.