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Pidilite – RESULT UPDATE
Growth revives, sales surges 26.3% Y-o-Y
Pidilite reported robust Q3FY11 result, revenue increased 26.3% Y-o-Y to ~INR 6.6 bn
and PAT grew 25.5% Y-o-Y to INR 806 mn. EBITDA was up 33.7% Y-o-Y to ~INR 1.1 bn.
Stellar growth across segments, diwali and exports prop up volumes growth
Consumer & Bazaar reported stellar revenue growth of 25% Y-o-Y largely volume led
(21-22% Y-o-Y). Also, Industrial products grew 33% Y-o-Y led by 70% growth in exports
for industrial products and 25-27% volume growth Y-o-Y. Price increase has been taken
in both Consumer (3-4% price hike) and Industrials (6-8% price hike). Price increase in
Industrials is higher as raw material pressure is higher in this segment and also in
consumer bazaar, the company has not taken price hike in lower price SKUs of INR 5 and
INR 10.
Margins improve in spite of increasing COGS
The company managed to improve EBIDTA margins by 96bps Y-o-Y in spite of steep raw
material inflation (COGS surged by 222bps) indicating company’s ability to maintain cost
and higher operating leverage. Higher COGS was offset by reduction in employee cost
(57bps) and other expenditure (262bps). Lower other expenditure can also be attributed
to lower ad spends in Q3FY11 as some of the ad spends have been shifted in Q4FY11
because of cricket world cup.
Synthetic elastomer- future growth potential
The company has conducted pilot tests for a few grades of synthetic elastomer, and
satisfied with the outcome, plans to incur a capex of ~INR 1,500 mn to set up a full
fledge plant which will be commissioned by the end of FY12 and will contribute to the top
line from FY13. Over 80% of the production is expected to be sold in overseas markets
and with recovery seen in major economies, this segment can be a significant contributor
to the company’s future growth prospects.
Outlook and valuations: Positive
We are bullish on Pidilite because of its strong brands, low competitive intensity, better
product quality, strong R&D capability, diverse product range, strong distribution, and
dipping debt equity. The company is investing in synthetic elastomer, which we believe
could be a potentially positive over the long term.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Pidilite – RESULT UPDATE
Growth revives, sales surges 26.3% Y-o-Y
Pidilite reported robust Q3FY11 result, revenue increased 26.3% Y-o-Y to ~INR 6.6 bn
and PAT grew 25.5% Y-o-Y to INR 806 mn. EBITDA was up 33.7% Y-o-Y to ~INR 1.1 bn.
Stellar growth across segments, diwali and exports prop up volumes growth
Consumer & Bazaar reported stellar revenue growth of 25% Y-o-Y largely volume led
(21-22% Y-o-Y). Also, Industrial products grew 33% Y-o-Y led by 70% growth in exports
for industrial products and 25-27% volume growth Y-o-Y. Price increase has been taken
in both Consumer (3-4% price hike) and Industrials (6-8% price hike). Price increase in
Industrials is higher as raw material pressure is higher in this segment and also in
consumer bazaar, the company has not taken price hike in lower price SKUs of INR 5 and
INR 10.
Margins improve in spite of increasing COGS
The company managed to improve EBIDTA margins by 96bps Y-o-Y in spite of steep raw
material inflation (COGS surged by 222bps) indicating company’s ability to maintain cost
and higher operating leverage. Higher COGS was offset by reduction in employee cost
(57bps) and other expenditure (262bps). Lower other expenditure can also be attributed
to lower ad spends in Q3FY11 as some of the ad spends have been shifted in Q4FY11
because of cricket world cup.
Synthetic elastomer- future growth potential
The company has conducted pilot tests for a few grades of synthetic elastomer, and
satisfied with the outcome, plans to incur a capex of ~INR 1,500 mn to set up a full
fledge plant which will be commissioned by the end of FY12 and will contribute to the top
line from FY13. Over 80% of the production is expected to be sold in overseas markets
and with recovery seen in major economies, this segment can be a significant contributor
to the company’s future growth prospects.
Outlook and valuations: Positive
We are bullish on Pidilite because of its strong brands, low competitive intensity, better
product quality, strong R&D capability, diverse product range, strong distribution, and
dipping debt equity. The company is investing in synthetic elastomer, which we believe
could be a potentially positive over the long term.
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