Pidilite Industries Ltd. share price target

Pidilite Industries Ltd Q2FY18 results comment Revenue rose by 0.63% to Rs. 1529.87 Cr in Q2FY18 when compared to the previous quarter. Also, it grew by 7.91% when compared with Q2FY17.

During Q2FY18, Pidilite recorded consolidated sales growth of ~8% YoY (~9% excluding sales of sales of Cyclo division). Standalone revenue growth of ~11% YoY led by volume & mix growth of ~12% YoY. This was largely on the back of, consumer & bazaar (C&B;) segment wherein sales were up by ~13% YoY on a LFL basis (~15% growth in volume & mix). This was largely due to re-stocking of inventory at dealer's level. Overseas business recorded ~2% YoY decline in revenue on the back of 37% decline in US revenues....

De-stocking as an initial response to GST implementation caused subdued performance; Brighter long term business prospects ahead: The company has recorded sales of Rs. 16693 Mn in Q1FY18 as against Rs.16913Mn of Q1FY17, down by 1.3% on YoY basis. During the quarter, therevenue performance was impacted due to rolling out of GST which caused destocking across the levels in the month of June 2017.

ICICI Securities Ltd | Retail Equity Research Pidilite recorded muted performance during Q1FY18 wherein sales were largely hurt by lower dealer demand in both consumer & bazaar (C&B;) and industrial segments. The flattish volume was primarily due to de-stocking of inventories at the dealers level before the implementation of GST. Overseas business declined by ~19% YoY due to divestment of US Cyclo business in US while sales were marred by floods in Bangaladesh and Sri Lanka...

One-off Quarter; Recovery Expected in Ensuing Quarters Pidilite Industries has reported a subdued performance in 1QFY18 on the backdrop of GST rollout. Its consolidated sales fell by 2.6% YoY to Rs15.3bn owing to flat volumes. While EBITDA fell by 18.5% YoY to Rs3.2bn, net profit declined by 16.8% YoY to Rs2.3bn in 1QFY18. Although the headline performance was muted, we consider it transient in nature as revenues suffered due to inventory de-stocking in June before the roll-out of GST w.e.f July, 01, 2017. Strong brands, superior management bandwidth, market leadership, pricing power and huge underserved market continue to be the key strengths of Pidilite. We expect the Company to post consolidated revenue and earnings CAGR of 13.9% and 16.4%, respectively through...

Decent volume growth in consumer bazaar product: Despite the challenging year, the company delivered decent consolidated sales growth of 6.3% to Rs. 60623Mnin FY17 from Rs. 57016 Mn in FY16 on the back of focus on core categories wherein volume growth of consumer and bazaar product grew by 8.2% and volume growth ofIndustrial product grew by 5.2% during FY17. Gross margin for the year improved at 179 bps to 56.5% from 54.7% on account of base effect of strong volume growth andlow raw material prices during FY17.

Revenue fell by 2.92% to Rs. 1295.39 Cr in Q4FY17 when compared to the previous quarter.

Recovery in Volume & Lower GST Rates Key Positives Pidilite Industries has posted a decent performance in 4QFY17 with its consolidated net sales and PBT increasing by 4.9% YoY and 7.7% YoY to Rs13bn and Rs2.5bn, respectively. Quarterly volume growth stood at an impressive 8% on YoY basis. However, its reported net profit declined by 7% YoY to Rs1.6bn mainly owing to 46% YoY increase in tax outgo. We estimate Pidilite to report 14.9% and 16.9% CAGR in revenue and earnings, respectively through FY17-19E. Based on expected EPS of 23, the stock currently trades at 31.9x FY19E earnings. Further, we expect Pidilite to benefit from GST roll-out, as the proposed tax rate...

ICICI Securities Ltd | Retail Equity Research Pidilite recorded sales growth of ~7% YoY in Q4FY17 supported by same amount of volume growth. The company's consumer & bazaar (C&B;) segment recorded volume growth of 8% due to recovery in demand post demonetisation. However, muted performance of the industrial segment can attributable to change in product mix and no price hike which translated into muted realisation during the period....

Demonetization Impacted Q3FY17 Earnings; But Long Term Outlook Remains Positive: Despite the tough economic condition in domestic market during Q3FY17, the company generated consolidated revenue of Rs. 14309 Mn as against Rs. 14205 Mn in Q3FY16, thereby marking flattish growth of 0.7% YoY.Consumer and bazaar product recorded flattish growth of 0.8% to Rs. 12186 Mn during the quarter whereas industrial product registered de-growth of 3.6% toRs. 2181 Mn from Rs. 2262 Mn in Q3FY16.