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Pidilite Industries: Buy, PT Rs200
Construction and paint chemicals continue to be the fastest growing segment
of the company. The company expects this segment to drive growth over
next 2-3 yrs, largely from the retail end of the market.
The company plans to maintain growth in its consumer products business by
introducing product variants, improving distribution, educating consumers
about wide product applications.
International subsidiaries - Brazil subsidiary's performance not in line with
company's expectations. It continues to make losses as the company faces
several problems in the country (cost inflation, raw material and supply
disruptions) but the company views the country as an attractive market given
the strong economic growth and fragmented nature of the market. It remains
focused on growing its business there by strengthening management team.
The US (auto aftermarket products and trading operations) and Bangladesh
subsidiary (Fevicol) are doing well and are generating positive cash profits.
Dubai subsidiary has been making losses for last 3-4 years but FY11 losses
higher due to one-time provisioning. The Egypt (manufacturing facility,
involved in Fevicol business) business is getting back to normalcy and the
company's objective is to tap the neighboring local markets with its strong
brand.
Elastomer project is on track with equipments ordered and civil work started,
the company expects to start the plant in 1HFY13. Only 5 players have
access to this technology globally. Dynamics - 20,000 p.a capacity (scalable
beyond this at marginal capital investment) and outlay of Rs530crs out of
which the company has already spent Rs3bn. The company expects very
attractive margin at 30% and annual turnover of $100mn at full capacity,
assuming normalized pricing levels.
Pricing trends - company will ensure that margins are protected by increasing
prices as cost increases though with a lag of one quarter. Last year the
company took price hikes of 4-5% in consumer & bazaar products and 6-8%
in industrial products.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Pidilite Industries: Buy, PT Rs200
Construction and paint chemicals continue to be the fastest growing segment
of the company. The company expects this segment to drive growth over
next 2-3 yrs, largely from the retail end of the market.
The company plans to maintain growth in its consumer products business by
introducing product variants, improving distribution, educating consumers
about wide product applications.
International subsidiaries - Brazil subsidiary's performance not in line with
company's expectations. It continues to make losses as the company faces
several problems in the country (cost inflation, raw material and supply
disruptions) but the company views the country as an attractive market given
the strong economic growth and fragmented nature of the market. It remains
focused on growing its business there by strengthening management team.
The US (auto aftermarket products and trading operations) and Bangladesh
subsidiary (Fevicol) are doing well and are generating positive cash profits.
Dubai subsidiary has been making losses for last 3-4 years but FY11 losses
higher due to one-time provisioning. The Egypt (manufacturing facility,
involved in Fevicol business) business is getting back to normalcy and the
company's objective is to tap the neighboring local markets with its strong
brand.
Elastomer project is on track with equipments ordered and civil work started,
the company expects to start the plant in 1HFY13. Only 5 players have
access to this technology globally. Dynamics - 20,000 p.a capacity (scalable
beyond this at marginal capital investment) and outlay of Rs530crs out of
which the company has already spent Rs3bn. The company expects very
attractive margin at 30% and annual turnover of $100mn at full capacity,
assuming normalized pricing levels.
Pricing trends - company will ensure that margins are protected by increasing
prices as cost increases though with a lag of one quarter. Last year the
company took price hikes of 4-5% in consumer & bazaar products and 6-8%
in industrial products.
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