PI Industries bets on innovation and scale to ride out trade turbulence

Trump’s tariff war is creating whiplash on Dalal Street. And few stocks are riding that rollercoaster quite like PI Industries.

The agrochemical major tumbled 6% in a week on fears of new US tariffs on Indian imports—only to rebound nearly 10% in a single day after the policy was abruptly put on hold. The see-saw reflects just how exposed Indian chemical exporters are to global trade shifts, and how even industry leaders like PI aren't immune to short-term shocks.

But peel back the noise, and PI Industries is executing a long-term play. With a deep R&D pipeline, global partnerships, and ambitious bets across pharma, electronics, and biologicals, the company is steadily transitioning into a broader life sciences powerhouse. While near-term profitability has taken a hit, PI’s fundamentals remain solid—and its 35% stock CAGR since 2011 shows investors are still buying into its story.

Read this | Why Trump’s trade war with China is bad news for Indian chemical exporters

That long-term vision—and the structural tailwinds behind it—have kept investors bullish. Here’s why.

Stock has kept pace with the promising outlook

Rising global food demand and the growing threat climate change poses to crop yields are expected to keep agricultural demand resilient. That, in turn, sets the stage for continued growth in agrochemical consumption. The global agrochemical market is projected to grow at a CAGR of 28% between 2021 and 2028, offering a strong runway for companies like PI Industries.

But PI’s ambitions stretch beyond just agrochemicals. The company is steadily evolving into a diversified life sciences player, with strategic forays into pharma, electronic chemicals, and biologicals. These segments not only promise strong growth but also help reduce PI’s reliance on the weather-sensitive agri-business.

Investors have taken note. PI Industries’ stock delivered a compound annual growth rate (CAGR) of 35% between 2011 and 2024, a testament to its ability to balance long-term vision with consistent performance.

Recent headwinds have hurt growth

Still, the near term hasn’t been easy.

Since peaking in September 2024, PI’s stock has lost a third of its value—dragged down by broader market volatility and specific industry headwinds. Dumping of subsidized Chinese chemicals over the last two fiscals has depressed international prices, while fluctuating commodity costs have further pressured demand and margins across the Indian chemical sector.

Read this | Deepak Nitrite's weak chemical margin comes as a shock catalyst

Of course, Ebitda margins have been protected so far because more than 70% of the company's revenues come from patented or proprietary products. But its exclusive-use patent in the US on its primary product Pyroxasulfone, as well as its intermediate patents in China are approaching expiry.

Moreover, overheads on account of new launches and investments in its Pharma business, along with a higher effective tax-rate (ETR), have dragged down its bottom-line.

In Q3FY25, revenue remained flat at ₹19,000 crore, continuing the long-term trend of topline-slowdown. This is despite the launch of new products, 40% year-on-year growth in new agrochemical export products, and 5% growth in domestic revenues.

While gross margin remained stable at about 53%, Ebitda margin contracted from 29% to 27% on account of the pharma business. Overall Ebitda declined by 8% over last year to ₹5,122 crore, but Ebitda excluding pharma has kept pace with revenue growth.

A combination of elevated overheads and higher ETR pushed the bottom line down 17%. Management has guided for single-digit revenue growth in FY25.

Pharma continues to post losses

PI Industries has been investing in growing its pharmaceutical business through PI Health Sciences (PIHS), and has ploughed in ₹94 crore in 9MFY25 towards expanding the business.

While pharma revenues have grown exponentially from ₹25 crore in Q1 to ₹64 crore in Q3FY25 and contributed to 2.5% of export revenues in the nine months ended FY25, the business is still nascent. Owing to spurts in sourcing and inventory mobilization, the segment has witnessed volatile revenues over the longer term.

Moreover, profitability has worsened with an unfavorable product-mix that eroded gross margins even as higher overheads continued on account of development expenses and provisions for doubtful debt.

Gross margin has contracted from 51% in Q3FY24 to 48% in Q3FY25, and PBT losses more than doubled from ₹71 crore in 9MFY24 to Rs183 crore in 9MFY25. The pharma segment dragged down overall Ebitda growth for PI from 17% to 9%.

That said, the business has secured a new CDMO order, and has built a decent project pipeline. The management hopes to triple Pharma revenues between FY24 and FY27-28.

The tariff see-saw

The US government’s intent to escalate its tariff war with China became evident in early March when President Trump doubled down on duties targeting Chinese imports. This spelled good news for Indian exporters in sectors like chemicals, which compete directly with China.

PI Industries, which derives 43% of its revenue from the US, led the rally—its stock surged over 15% in just a month.

But the optimism was short-lived. In April, Trump announced “reciprocal tariffs” of up to 27% on Indian goods, threatening to undercut India’s newfound advantage. PI’s stock fell 6% in response.

Read this | Trump reciprocal tariffs: Here’s the best-case scenario for India

Last week brought a reprieve. While US tariffs on China were raised sharply to 145%, the proposed tariffs on Indian imports were paused for 90 days. That twin development—restoring India’s edge and easing fears of a US slowdown—sparked a fresh rally in Indian chemical stocks. PI Industries jumped nearly 10% in a single day.

As US trade policy continues to shift, investors should expect volatility in PI’s stock to remain high. The company may be riding global tailwinds, but the ride won't be smooth.

Outlook remains promising

PI Industries continues to invest aggressively in innovation, building a robust pipeline to offset upcoming patent expiries.

With over 20 products at various stages of development, the company is strengthening its R&D capabilities. It recently became the first Indian firm to receive ISO approval for Pioxaniliprole. Backed by a capex of ₹744 crore in the first nine months of FY25—while remaining net debt-free—PI has launched six new products in the export segment and six more under its domestic agri-brand portfolio.

The demand environment is improving, as indicated by declining customer inventories. Starting in the second half of 2025, the commercialisation of new products in a recovering market is expected to boost growth in the company’s CSM export business. Its nascent pharma business is also expected to scale over the medium term, adding diversification and new revenue streams.

Profitability will likely expand as new products gain scale and unlock operating leverage. Efforts to accelerate inventory turnover are paying off—trade working capital has improved significantly, from 116 days to 68 days over the past few years. Meanwhile, the acquisition of Plant Health Care strengthens PI’s Biologicals portfolio, with Ebitda break-even expected in the next few years.

For more such analyses, read Profit Pulse.

On the domestic front, the agri business is poised to rebound, supported by a strong monsoon outlook, healthy reservoir levels, and government initiatives aimed at boosting rural demand. Early signs are visible—Q3FY25 domestic revenue rose 5% year-on-year, even as exports remained under pressure. While pricing pressure in generics persists, new product launches and growth in Biologicals should help offset the drag.

That said, realization pressures from Chinese dumping and the execution timeline of strategic initiatives will need close monitoring.

Ananya Roy is the founder of Credibull Capital, a SEBI-registered investment adviser. X: @ananyaroycfa

Disclosure: The author does not hold any shares of the companies discussed. The views expressed are for informational purposes only and should not be considered investment advice. Readers are encouraged to conduct their own research and consult a financial professional before making any investment decisions.