Pidilite Industries' 3QFY13 :: Motilal Oswal

 Pidilite Industries' 3QFY13 standalone sales grew 21.6% to INR8.3b (est
INR8.4b); EBITDA margins expanded 80bp to 18.1% (est 18.8%), adjusted PAT
grew 20% YoY to INR1.04b (est INR1.1b) supported by higher-than-expected
other income of INR164m (est INR100m). Reported PAT grew 67.2% as it
included a) forex gains of INR89.3m, against a forex loss in base and
b) reversals of INR109.9m in interest expense due to FCCB conversion.
 Consumer Bazaar segment registered 16% volume growth in 3QFY13.
 PIDI reported healthy gross margin expansion of 200bp on account of sustained
easing of VAM prices. Despite healthy gross margin expansion and savings in
staff cost by 60bp, the steep increase in other expenses (up 180bp) curtailed
EBITDA margin expansion to 80bp to 18.1%.
 During the quarter it benefited from FCCB conversion as 104 bonds with a
face value of USD0.1m per bond were converted into equity shares. Hence,
PIDI reported a forex income of INR89mn v/s forex expense of INR25m in
3QFY13.
 Consumer & Bazaar sales were up 23.9% led by double digit volume growth
(16%). EBIT margins expanded 30bp YoY to 23.4%.
 Industrial Products reported 15% growth in sales; EBIT declined marginally
by 12bp to 11%.
 The stock trades at 21.2x FY14E and 18x FY15E EPS, we roll forward to FY15 and
maintain Buy with a revised target price of INR275 (23x FY15E EPS). We value
PIDI at 20% discount to Asian Paints.

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