Pidilite Industries Ltd. share price target

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.

Revenue decreased by 5.83% to Rs. 1328.06 Cr in Q3FY17 when compared to the previous quarter. Also, it decreased by 0.33% when compared with Q3FY16.

ICICI Securities Ltd | Retail Equity Research Pidilite recorded muted sales growth of 0.8% YoY in Q3FY17 due to adverse impact of demonetisation. Company recorded decline in volume by 0.7% YoY led by 1.5% YoY dip in volume of Consumer & bazaar (C&B;) segment. Industrial segment sales were declined by ~4% YoY as volume growth of 4% YoY was completely offset by decline in realisation by 7-8% during Q3FY17. EBITDA margin declined 33 bps YoY as saving in raw material cost...

Pidilite delivered decent performance in 3QFY17 despite demonetisation. While consolidated net sales remained flat at Rs13.3bn, net profit grew by 1.7% YoY to Rs2bn. The core Consumer & Bazaar business posted 0.8% YoY growth in sales, while the Industrial Products segment witnessed 3.6% YoY de-growth. Overall quarterly volumes fell by 0.7%. Considering the impact of demonetisation on 3QFY17 numbers, we have downwardly revised our earnings estimates by ~3%. Expecting Pidilite's revenue and earnings to grow 12% and 15.5% CAGR respectively through FY16-19E, we maintain our BUY recommendation on the stock with Target Price of Rs832....

Short Term Mildly Negative But Brighter Long Term Outlook: Sales, EBITDA & PAT grew by 9.0%, 7.2% & 13.1% to Rs. 15.3bn/3.2bn/2.3bn VsRs.14.0bn/3.0bn/2.0bn YoY, respectively on the back of strong standalone volume growth of 9.0% in Q2FY17 Vs 1.0% volume growth in Q2FY16. Gross margin for thequarter improved at 215 bps to 56.9% from 54.7% on account of higher sales on specialty products and low raw material prices during Q2FY17.

ICICI Securities Ltd | Retail Equity Research Pidilite reported sales growth of 9% YoY led by 8.5% volume growth YoY (domestic) in Q2FY17. Consumer & bazaar (C&B;) segment recorded sales growth of 9.4% YoY led by 7.8% volume growth,...

Fundamentals Remain Intact, Existing Trend to Continue: Revenue/EBITDA/PAT have grown by 8.6%/15.2%/15.7% to Rs.16.9bn/3.9bn/2.7bn(Vs Rs.15.6bn/3.4bn/2.3bn YoY), respectively on the back of 9.3% volume growth(domestic) in Q1FY17. The company's EBITDA margin rose by 410 bps QoQ and133 bps YoY due to softening in crude oil prices. Vinyl Acetate Monomer (VAM)is the key input of products which is co-related to crude oil price. Decline in rawmaterial prices by 4.2% YoY has resulted into, EBITDA improving by 15.2% YoY and 65.4% QoQ.Other Expenses/Sales has fallen by 8.5% QoQ because of no cost on advertisement incurred during Q1FY17. The company has reported net profit growth due to high EBITDA margin and high other income (up 72.9% YoY). The improvement in net profit margin by 97 bps YoY resulted into NPM of 16.0% in Q1FY17 Vs 15.0% in Q1FY16

Valuation and Outlook : Strong margin performance and near monopolistic position with ~70% and more than 50% market shares in flagships brands of Fevicol and Dr. Fixit, respectively, growth story of the company is intact. Besides, continuing product innovation, focus on special chemical business, brand building having hired Mr. Amitabh Bachchan as Brand Ambassador, make products premiumized. We value the company at P/E 48.0x to FY18E EPS which is currently trading at PE 40.1x of FY18E EPS and reiterate our “BUY” recommendation with target price of Rs. 840 representing potential upside of 20%

Pidilite reported sales growth of 8.6% YoY led by 9.4% volume growth YoY (domestic) in Q1FY17. Consumer & bazaar (C&B) segment recorded sales growth of 9.4% YoY led by 9% volume growth, addition of the water proofing business and strong performance of overseas subsidiaries. Besides, revenue growth of industrial segment was largely driven by ~12% YoY volume growth • EBITDA margin expansion of 134 bps YoY was mainly due to saving in raw material cost by ~400 bps YoY. However, gains were marginally offset by an increase in other expenses and employee expenses by ~200 bps and 50 YoY, respectively. Higher tax charges were due to the end of benefits of some manufacturing plants. PAT growth at ~16% YoY was due to an increase in EBITDA margin • On a constant currency basis, the company’s overseas subsidiaries (excluding newly started business) recorded sales growth of 14% YoY (constant currency basis) to ~| 174 crore. We have modelled consolidated revenue, earnings CAGR of 15%, ~24%, respectively, for FY15-18E supported by higher EBITDA margin

Pidilite Industries' (PIDI) 1QFY17 performance was below our expectations. Consolidated sales grew 6.8% YoY (est. of +18% YoY) to INR15.7b (Ind-AS). Volume growth was reportedly ~9% YoY in the Consumer Bazaar segment. EBITDA grew 15.2% YoY (est. of +25.6%) to INR3.94b. Adjusted PAT was up 16.4% YoY (est. of +23.6%) at INR2.72b. Sharp gross margin expansion: Gross margin expanded sharply by 330bp YoY to 52.3% aided by benign input costs, but the impact was partly offset by higher staff costs (+70bp YoY) and other expenses (+80bp YoY). EBITDA margins...

We expect revenue to grow at a CAGR of 14.8%, while EBITDA and net profit are likely to grow by 19%-20% and 12%-13% respectively, during FY16-FY18E on the back of revival in the overall economy.