Key Points
PI Industries' foray into the pharma industry through two acquisitions will diversify its business and reduce its dependency on agro..
The access to CDMO business of pharma will give the company access to global markets in the US, India, and Italy..
The deal, valued at 4.2x EV/EBITDA, will be EPS accretive on existing numbers alone and is expected to be 7-8% EPS accretive going forward, with further growth of the two acquired companies contributing to 12-15% EPS growth over the next two years..
Rohan Gupta, Director, Equity Research, Nuvama, says PI Industries' foray into pharma through these two acquisitions is going to help the company in terms of replicating their success stories of what they had done in agrochemicals..
In terms of the margin profile and the competitive intensity of the CDMO or in general pharma space, we are yet to see how this company will be able to capitalise on their existing chemical efficiencies and chemical manufacturing capabilities..
