PI Industries share price jumps 5% on acquisition of Plant Health Care; should you buy the stock?

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Also Read: Why are India Cements shares skyrocketing today? — explainedPHC’s acquisition aligns with PI’s long-term strategic objective to build a differentiated portfolio of integrated solutions for sustainable agriculture. With PHC, PI will gain access to cutting-edge biological/peptide technology platforms in the “Plant Immunity Inducers" space, the company said in a release.PI already has a portfolio of 8 products and many more in the development & registration pipeline.

Revenue from biological products increased by ~29% in FY24, it added.“Acquisition of Plant Health Care is a strategic move to expand our portfolio in the agri-tech sector. We believe synergies between our organisations will unlock long-term value and accelerate growth," said Rajnish Sarna, Joint Managing Director of PI Industries Ltd.Also Read: Dr Reddy's share price in focus on OTC brands acquisition outside the USAnalysts believe this acquisition shall strengthen PI’s biologicals portfolio, while still in a relatively nascent stage, the acquisition is expected to be EPS decretive due to losses.PHC reported revenues of $11.2 million in 2023 and $11.8 million in 2022.

The company reported gross margins of ~60% over the past couple of years. Due to higher R&D, sales/marketing, and admin expenses, the company reported loss of $4 million in 2023 and $9.5 million in 2022.Also Read: Titan share price in focus as stock trades ex-dividend today. Details here“The technology based acquisition is expected to strengthen PI’s biologicals portfolio.

During FY24, biologicals contributed ~12% to domestic agri brand revenues and sales surged ~29% YoY. With the new tech-based products, PI can further strengthen its domestic biologicals portfolio.