PI Industries Ltd’s shares have fallen around 22% in the past six months. Subdued global and domestic demand has marred the agro-chemicals company’s recent earnings performance and investor sentiment. The custom synthesis and manufacturing (CSM) segment, which contributed about 77% of total revenue in the half year ending September (H1FY26), has been bearing the brunt. PI now faces another hurdle that could accentuate the downward pressure on the stock.
Japanese agrochemical giant Kumiai Chemicals, a major customer of PI, recently lowered its FY26 revenue and profit guidance. PI supplies the herbicide pyroxasulfone to Kumiai, which anticipates a 5% revenue decline and a 32% fall in operating profit, hurt by pricing pressure and muted herbicide demand in some overseas markets.
Kumiai's revised outlook will have a bearing on PI’s revenue visibility linked to pyroxasulfone sales. Saurabh Ahire, an analyst at PL Capital, said, “Our analysis shows that, in FY25 pyroxasulfone was 54% of PI’s CSM revenue and 43% of its overall revenue; this reduced to 44% and 34% in H1FY26. Other agrochemical products such as Fluindapyr, PCM N- 2-Chloro-4-Fluoro-5- Ethoxycarbo do not contribute more than 7-8% each to the CSM segment, which means declining pyroxasulfone sales is a dampener.”
PI has therefore seen earnings downgrades by some brokerages. JM Financial Institutional Securities cut its FY27-28 earnings per share estimates by around 4%, cautioning that PI is likely to see only muted incremental contribution from pyroxasulfone in FY27, and thus needs a big push from the rest of its agri portfolio and new avenues of pharma and biologicals, and electronic/speciality chemicals segments.
No quick fix
But fetching meaningful contributions from these businesses will take time. The pharma business is still in its ramp-up phase, with higher overheads and one-off costs impacting profitability. In Q2FY26, this segment saw 54% year-on-year growth in revenue, but remained loss-making. Here, the company is onboarding new clients and investing in an integrated contract research, development, and manufacturing organization (CRDMO) platform.
In the electronic/specialty chemicals business, PI already has five or six electronic chemical products commercialized and capacity expansions underway. In short, while measures may be directionally positive to generate new earnings streams, for now, PI’s fate is tied to its core agro-chemicals business.
The global crop protection industry faces multiple headwinds such as distributor/farmer destocking, weak prices and Chinese overcapacity, so management expects the recovery to be gradual. It sees a modest improvement in global demand starting in Q3FY26, but a full recovery is not anticipated until H2FY26.
Agrochemical exports were soft in H1FY26 as customers delayed deliveries to rebalance inventories. In the domestic business, the Rabi season is crucial for H2. While good water reservoir levels and paddy crop support Rabi prospects, fast-changing weather remains a risk, management cautioned.
PI guided for an Ebitda margin of 25-27% for FY26, despite clocking around 28% margin in H1FY26. As things stand, PI’s performance in the December quarter (Q3FY26) is expected to be muted. Emkay Global Financial Services is pencilling in a low-single-digit year-on-year dip in FY26 revenue after a 12% decline in H1FY26 sales.
Meanwhile, the stock is trading around 28 times estimated FY27 earnings, showed Bloomberg data. “PI is better placed on margin than some domestic peers such as Coromandel International Ltd, Anupam Rasayan India Ltd and Dhanuka Agritech Ltd, but as of now there are no visible upside positive triggers for the stock,” Ahire added.