PI Industries stock has fallen 11% over the past two trading sessions as pressure in its custom synthesis and manufacturing (CSM) business persisted. CSM revenues have now declined year-on-year for five consecutive quarters. The segment contributed about 75% of the agrochemicals company’s total FY26 revenues of ₹6,714 crore (down 16% year-on-year).
Weak demand and customers’ shift to just-in-time procurement continued to weigh on the CSM business, where revenue declined 15% in the March quarter (Q4FY26), though that marked an improvement from the 32% drop in Q3FY26.
Management said the global crop-protection market remains stuck in a prolonged multi-year downturn, resulting in an uneven recovery. The West Asia conflict has added to disruptions. In the domestic market, elevated channel inventories, weak crop prices following lower acreage under key crops, and uneven rainfall hurt demand. CSM volumes fell 14% in FY26.
Growth hopes for FY27
Management remains hopeful of a revival in agrochemical demand in FY27. In the domestic market, weather-related uncertainty ahead of the kharif season could be partly offset by higher reservoir levels. While the company did not offer any qualitative revenue-growth guidance, it expects growth to be supported by traction in molecules launched in FY26. It is also banking on its first home-grown new chemical entity, Pioxaniliprole, slated for launch in FY27.
Still, caution is warranted. In the CSM business, PI’s concentration in the pyroxasulfone molecule, which has gone off-patent, could weigh on growth.
“PI’s key customer expects generic competition in Pyroxasulfone to be evident in Q1FY27 which may impact pricing and volume,” said a Nuvama Research report. The brokerage expects future CSM growth to be driven largely by the non-pyroxasulfone portfolio and is building in 8% and 10% growth in the segment for FY27 and FY28, respectively.
It is also trying to increase the contribution from biologicals, pharmaceuticals CRDMO and electronic chemicals platforms. Pharma is pegged as a key medium-term growth driver with management targeting ₹500-600 crore revenue over the next few years. The business onboarded new customers in FY26 and is expected to turn Ebitda positive in two-three years as revenue scales.
For now, analysts are trimming earnings estimates amid lingering pain in the CSM business. Citing weak management guidance, Emkay Global Financial Services cut its FY27 and FY28 earnings-per-share estimates by 19% and 10%, respectively. The stock trades at 29x estimated FY27 earnings, according to Bloomberg data. Sustained recovery in CSM growth remains critical.