PI Industries: Strong Moat, Buy for 30% Upside

Value investor- India mid & small caps

Bhaskar Chakraborty

Thematic (Sector/Industry)

<ul><li>Recently, the consumer insights arm of WPP came out with a report suggesting a sharp pickup in FMCG sales volume in rural India in 2QFY18</li><li>We see continued pressure on rural incomes in 2HFY18 and believe any recovery will be modest at best</li><li>We note prices of key crops like rice, wheat, corn, soybean, cotton and mustard are down YoY</li><li>Milk prices are down 10% in the last three months</li><li>Agrochemical companies guide to continuation of challenging market conditions in 2HFY18</li><li>FMCG majors HUL and Dabur report rural growth in line with urban growth</li><li>Bajaj Finance's rural heavy 2 &amp; 3-W loan delinquencies remain significantly elevated from pre-demonetization levels</li><li>Gold demand in rural wedding season drops 25-30% YoY</li></ul>

Recently, the consumer insights arm of WPP came out with a report suggesting a sharp pickup in FMCG sales volume in rural India in 2QFY18We see continued pressure on rural incomes in 2HFY18 and believe any recovery will be modest at bestWe note prices of key crops like rice, wheat, corn, soybean, cotton and mustard are down YoYMilk prices are down 10% in the last three monthsAgrochemical companies guide to continuation of challenging market conditions in 2HFY18FMCG majors HUL and Dabur report rural growth in line with urban growthBajaj Finance's rural heavy 2 &amp; 3-W loan delinquencies remain significantly elevated from pre-demonetization levelsGold demand in rural wedding season drops 25-30% YoY

A Rural Recovery Is Underway in India, or Is It?