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Morgan Stanley (NYSE:MS) upgraded PI Industries Ltd (NSE:PI) stock rating from Equalweight to Overweight on Monday, raising its price target to INR5,000.00 from INR3,524.00.
The upgrade comes as Morgan Stanley believes investors will increasingly recognize PI’s ability to transition its portfolio beyond Pyroxasulfone, a key product facing patent expiry in the U.S. market during 2026-27. This patent expiry concern contributed to an approximately 20% derating in PI’s stock over the past nine months.
Morgan Stanley highlighted several factors supporting its more positive outlook, including PI’s scale-up of new molecules, which now represent nearly a fifth of its exports portfolio and continue to grow. The firm also noted traction within PI’s biologicals portfolio and a turnaround in the domestic brands business after two challenging years.
The research firm expressed confidence in PI’s resilient margin delivery despite market challenges. These factors collectively support Morgan Stanley’s view that PI Industries can successfully navigate the upcoming patent expiry of its key U.S. product.
Morgan Stanley expects these developments will underpin a re-rating in PI’s multiples, potentially returning to levels seen in 2022 through the first half of 2024, as investor confidence grows in the company’s portfolio transition strategy.
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