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Pidilite: High demand boosts bottomline
Feb 10, 2011

Pidilite Industries has announced its 3QFY11 results. The company has reported a 27.2% YoY and a 24.8% YoY growth in sales and net profits respectively. Here is our analysis of the results.

Performance summary
  • Net sales grow by 27.2% YoY during 3QFY11. This is led by strong demand in the consumer & bazaar products and industrial products segments.
  • Operating (EBITDA) margins remained flat as higher raw material costs were balanced by fall in staff costs and other expenditure (all as a percentage of sales).
  • Net profits increased by 24.8% YoY. This is due to higher operating income, increase in other income, and fall in interest rates partly offset by higher taxes and lower exceptional items.
  • Net profit for 9mFY11 grew by 15.1% YoY while the net profit margins declined by 0.8%. This decline is a result of increase in raw material costs and rise in effective tax rate. The decline could have been sharper but for higher other income, fall in depreciation and in interest costs during the period.

Standalone financial snapshot
(Rs m) 3QFY10 3QFY11 Change 9mFY10 9mFY11 Change
Sales 4,668 5,936 27.2% 14,974 18,146 21.2%
Expenditure 3,735 4,751 27.2% 11,612 14,164 22.0%
Operating profit (EBDITA) 932 1,185 27.1% 3,361 3,983 18.5%
Operating profit margin (%) 20.0% 20.0%   22.4% 21.9%  
Other income 13 55 328.7% 54 115 114.9%
Interest 74 52 -30.0% 228 221 -3.2%
Depreciation 108 111 2.5% 349 330 -5.3%
Profit before tax 763 1,078 41.2% 2,838 3,547 25.0%
Exceptional gains/(losses) 35 6   (48) (22)  
Tax 117 233 100.1% 405 779 92.4%
Profit after tax/(loss) 682 851 24.8% 2,385 2,747 15.1%
Net profit margin (%) 14.6% 14.3%   15.9% 15.1%  
No. of shares (m) 253 506   253 506  
Diluted earnings per share (Rs)*         6.4  
P/E ratio (x)*         19.7  
* On a trailing 12-month basis

What to expect?
At the current price of Rs 126, the stock is trading at a multiple of 19.7 times its trailing 12-month earnings. We shall update our analysis shortly.

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