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Motilal Oswal
PI Industries (Buy)
CMP: ₹1,262.05
Target: ₹1,459
PI Industries has acquired Isagro Asia for ₹3.5b at a valuation of about 15x P/E FY19. PI Industries should derive synergies from the acquisition in custom synthesis & manufacturing (CSM) and in the domestic formulation business.
Key highlights of the deal: a) Isagro Asia operates in India and is engaged in contract manufacturing, local distribution and exports of agrochemicals.
b) PI will acquire 100 per cent shareholding held by Isagro S.p.A in Isagro Asia, either directly or through a subsidiary. The deal has taken place at a valuation of about 15x P/E FY19. PI Industries will fund the acquisition partly through internal accruals and partly through debt.
c) The proposed transaction is expected to be completed in 3QFY20, subject to finalisation of definitive agreements, customary closing conditions and regulatory approvals. Company remains confident of integrating Isagro Asia’s operations with itself in FY20.
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