PI Industries' UK Acquisition Cheers Brokerages: Potential 45% Upside in Share Price

PI Industries’ proposed acquisition of the UK's Plant Health Care Plc has received strong approval from brokerages, who anticipate up to a 45% upside for the agrochemicals firm's stock. This optimism is driven by growth opportunities and potential expansion in the biologics market.

PI Industries stock gained nearly 2%, reaching ₹3,844 during the morning trade.  

Jefferies anticipates that the acquisition will add an annual revenue potential of $75 million, while Equirus estimates that the total addressable market for biological products could exceed $10 billion for PI Industries to tap into. PI Industries has announced that it will acquire Plant Health Care for GBP 32.8 million (approximately ₹350 crore).

Equirus issued a ‘long call’ on PI Industries stock, setting a target price of ₹5,500 per share, which implies a 45% upside from the last closing price. Meanwhile, Jefferies has a 'Buy' rating on PI Industries stock with a target price of ₹4,750, indicating a 25% upside from the current stock price. 

Jefferies noted that the acquisition would grant PI Industries access to a diverse product portfolio for major crops across key global markets. By acquiring a biologics company, PI Industries will obtain an established product line aimed at enhancing crop yields. Additionally, Jefferies stated that the acquisition aligns strategically with PI Industries' growth objectives.

Jefferies also finds the valuation attractive, citing the traction of new products and the potential cost advantages and profitability that could arise from the likely relocation of production to India.

Equirus also expressed that it believes PI Industries can leverage Plant Health Care’s technology and potentially transfer and scale it to manufacture biological products. 

Plant Health Care’s patented products, which serve as biological enhancers or 'vaccines for plants', present a substantial market opportunity. These products are designed to improve crop yield and quality, providing PI Industries with a competitive edge in the agrochemical sector.

PI Industries Limited manufactures agricultural and fine chemicals, as well as polymers. The company produces fine chemicals, crop protection products, plant nutrients, seeds, and engineering plastics, which are used in the automobile, electrical, and home appliances industries. PI Industries serves customers across India.