Amid a challenging global environment, agrochemical major PI Industries is betting on novel molecules developed in-house and is branching out into manufacturing capabilities for pharmaceuticals, speciality chemicals, and electronics to fuel long-term growth.
“We are an 80-year-old organization, I do believe after a certain scale and size in the world today, innovation creates moats…it's a call of risk and an appetite,” Mayank Singhal, managing director and vice chairperson of the Mumbai-headquartered firm, told Mint in an interview.
The shift is a result of falling prices, Chinese competition, geopolitical instabilities and extreme weather affecting its core revenue. Net income dropped 39% in the first quarter of fiscal 2027, prompting downgrades to earnings estimates as management scaled back sales growth projections. In the first quarter of FY27, PI’s revenue was down 10% to ₹1,702 crore, and net profit was down 39% to ₹244 crore. Its share price has dropped 35.59% over the past year on the National Stock Exchange to ₹2,420.40 apiece.
“Topline is driven by putting India on the innovation footprint. I think that's been the passion and dream,” said Singhal.
To guard against volatility, the company is leveraging a $200 million, decade-long investment in internal research and is preparing to launch its first in-house insecticide in domestic and international markets.
- PI Industries transitions from contract manufacturing to high-margin, in-house drug and crop innovation.
- Steep Q1 profit drops prompted analysts to lower earnings and revenue forecasts.
- A $200 million research investment fuels ninety new assets, leading with Pioxaniliprole.
- Non-agricultural entry into pharma and electronics aims to hedge recurring market risks.
- Management anticipates export recovery in late FY27 despite persistent sector overcapacity.
Its first innovative asset, an insecticide called Pioxaniliprole for crops like corn and rice, is expected to launch in the domestic market this year after securing regulatory approvals, and in export markets such as the US and Latin America in subsequent years via partnerships. Singhal estimated an addressable market of about $100 million across India and overseas markets, including the US, Mexico and Brazil.
The company expects regulatory approvals for India this year, and will file for the US next year, and Brazil in the subsequent year.
Expanding capabilities and moving up the value chain help avoid low-price wars, but it takes years and carries significant risks before these new areas actually generate real profit.
The firm has two more molecules in advanced stages, which it plans to announce soon, and a total of 90 assets under development.
Hedging against headwinds
The agrochem sector faced a soft quarter due to El Niño, overcapacity and pricing pressure, said analysts at Kotak Institutional Equities in a note on 16 August. “Given a looming slowdown in demand due to price inflation and macro uncertainty, combined with still-elevated valuations across most frontline names, we retain a cautious overall stance on the [chemicals] sector,” it said.
The brokerage cut its FY28 EPS estimates for PI by 12.6% to ₹84.20, noting that “Management appears to have lowered FY2027 revenue growth guidance to the low-single-digits (versus high-single-digits to low-double-digits previously), while stating that it expects FY2027 to be better than FY2026, driven by a recovery in exports in 2H, new product launches and the gradual scale-up of pharma and global biologicals.”
The firm is investing in biological platforms as a derisker to some of the structural challenges it faces. In 2024, the company bought PREtec to make eco-friendly biopesticides, blending new biological tools with its existing chemical expertise.
Beyond agriculture, PI is building capabilities in pharmaceuticals and electronics, areas where it sees significant growth opportunities.
Its pharmaceutical contract research, development, and manufacturing organisation (CRDMO) arm has a significant uptick in enquiries; however, this is a long-gestation business and “you will start seeing green shoots in 2-3 years,” said Singhal.
Remaining dependent on cost-plus manufacturing is increasingly unsustainable. “Cost plus doesn't make it sustainable for a long time. And yet, innovation can also have a high risk. So you must jump whichever way,” said Singhal.