Target: ₹4,270

CMP: ₹3,363.50

The 12 per cent correction in PI Industries stock price for the past two trading sessions since the Agropages news report regarding pyroxasulfone (a pre-emergent herbicide used in wheat, maize, and soybean) capacity creation in China should abate, given that pyroxasulfone is likely to be under patent in the US (the largest market) and Latin America until CY25 and CY30, respectively.

It has gone off-patent only in smaller markets of India and Australia; 2) securing registrations for generic pyroxasulfone in the US is unlikely before CY26; 3) the pyroxasulfone market size is likely to expand vs. the current market size of ₹600–700 million as per management, led by increased penetration in major consumption markets of the Americas and Australia.

The financial impact of increased competition or global inventory of pyroxasulfone is unlikely, and we expect the recent correction to be short-lived. Pyroxasulfone, as a molecule, would continue to see market expansion as it is still under patent in key geographies of the Americas.

We keep our earnings estimates unchanged. Due to a 12 per cent correction in the stock price in the past two days (vs. a 0.5% decline in the Sensex), we upgraded the stock to Buy from Accumulate with an unchanged TP of ₹4,270 based on 30x FY25E EPS of ₹143.