Shares of agrochemical company PI Industries fell sharply after its deal with active pharmaceutical ingredient or API maker Ind Swift Laboratories fell through. However, shares of Ind Swift Laboratories were locked in 10% upper circuit of Rs67.40. PI Industries shares were down about 8% to Rs2,756 on BSE. PI Industries shares have been a multibagger stock in the chemical space, giving returns of 2,800% in last 10 years.

In July this year, PI Industries Limited (PI) had executed a business transfer agreement (BTA) with Ind-Swift Laboratories Limited (ISLL) for acquisition of their API and Intermediates business undertaking on a slump sale going concern basis.

PI Industries in a November 1 statement said that the consummation of the transaction was subject to fulfilment of pre-defined conditions precedents before the Long Stop Date of October 31, 2021. “Since Ind-Swift Laboratories has not been able to complete several of these pre-agreed conditions precedents, the BTA stands terminated," PI Industries said in a statement today. “In view of non-fulfillment and also disagreement on some of the pre-agreed conditions, the Company has decided not to further pursue the aforesaid transaction."

However, PI Industries stated that its strategy to strengthen presence in custom synthesis exports through diversification into adjacencies including pharma remains intact and the Company “will also continue to evaluate other M&A opportunities that are aligned to it strategic direction with the intention to create a differentiated scale play in pharma."

PI Industries also said that the R&D establishment within the company “remains attuned to developing and scaling multiple advanced technologies, processes, and platforms to execute its long-term strategy."

At the time of announcing the Ind-Swift Laboratories deal in July, PI Industries said it envisions the pharma vertical as one of the key pillars for future growth. “It is aiming to create a differentiated position in Pharma sector by leveraging its core competencies in complex chemistry, operational excellence, technology platforms and global reach through partnership with large innovator," the company had said in a July 31 statement. 

Ravi Singh, Head of Research & Vice President, ShareIndia, said: “PI industries had made a high of 3535 on 17th September this year and today it is around 22% low from it's high. The strong support stands at 2500 levels and due to the impact of this news, we expect PI Industries to test it's support in next trading sessions."

“The market was expecting a 6-7 percent adition to profit via this agreement therefore we are seeing a sharp cut after the termination of the agreement. We are seeing a negative reaction in stock due to this news. However overall fundamentals are still strong for this company and it is one of the quality companies in the agrochemical space," said Santosh Meena, Head of Research, Swastika Investmart.

Technically, it is sitting at its 200-DMA of Rs2750 and “if it manages to hold that level then we can expect a bounce back. Otherwise it may see more correction towards the Rs2,500 level and that would be a great buying opportunity," Meena added. 

In a statement, Ind Swift Laboratories said its board of ISLL in its board meeting held on 1st November discussed the matter and has decided not to extend the Long Stop Date.

“As far News is concerned for investors, it’s a great time to accumulate stocks as bad news makes good profits if long term business economics of business doesn’t impact. PI industries in last 10 year provides 30 percent CAGR to its investor. Business is almost debt free & recently its cash flow is grown at rapid pace," said Ankit Yadav, Wealth Manager (USA) and Director of Market Maestroo.

As per Yadav, the dip is a good opportunity for investors to accumulate the business for long term.