Pidilite: Some sticky issues - Views on News from Equitymaster

Helping You Build Wealth With Honest Research
Since 1996. Try Now

  • MyStocks

MEMBER'S LOGINX

     
Login Failure
   
     
   
     
 
 
 
(Please do not use this option on a public machine)
 
     
 
 
 
  Sign Up | Forgot Password?  

Pidilite: Some sticky issues

Jun 27, 2002

Adhesives and sealants major, Pidilite Industries', improved its showing in FY02. The company registered a 12% topline growth during the year. Backed by cost controls, Pidilite showed a slight improvement in operating margins.

(Rs m)FY01FY02Change4QFY02
Net Sales4,3824,91612.2%1,052
Other Income8169-14.4%26
Expenditure3,5673,98811.8%867
Operating Profit (EBDIT)81592813.9%185
Operating Profit Margin (%)18.6%18.9% 17.6%
Interest 7042-40.3%9
Depreciation16519014.8%48
Profit before Tax66176615.9%154
Tax18224535.1%75
Profit after Tax/(Loss)4805218.7%79
Net profit margin (%)10.9%10.6% 7.5%
No. of Shares 25.225.2 25.2
Diluted Earnings per share*19.020.6 12.5
P/E Ratio 10.2 16.8
*(annualised)    

Pidilite's flagship product ‘Fevicol’ is a generic name for adhesives in India and commands 60% market share. The company is backed by a strong R&D base and has pioneered almost 60% of the products it sells. Therefore, its products command a huge price premium over competing brands. The companies other major brands are 'M-seal', 'FeviKwik' and 'Ranipal'.

Despite lower interest outgo (down 40% YoY), Pidilite's net profit only saw a small improvement of 9% YoY. Higher depreciation provisioning as well as deferred taxes pruned bottomline growth. However, given the company's focus on cost efficiencies and debt restructuring the company's long term outlook looks encouraging.

Cost break-up
(Rs m)FY01FY02Change
Raw material1,6381,80510.2%
Staff 31637117.3%
Packing material4955184.7%
Others1,1181,29415.7%
Total expenditure3,5673,98811.8%

Though competition has come in branded adhesives and sealents with 'Parcol' as well the Kitply Group's 'Kitcol', Pidilite has managed its grip on the market through innovative products. The company is also a famed marketer of adhesives. Its product ad-campaigns for Fevikwik and Fevicol are top award recipients. However, Pidilite has a knack of acquiring products or brands that are seemingly unrelated to its existing product folio.

Its entry into the branded fabric whitener through acquisition of 'Ranipal' in FY00 is still viewed with skepticism. During the year, Pidilite has commissioned 14 wind mills costing Rs 203 m. The company has also acquired the trademark, 'Steelgrip', know-how and some equipments along with business of Electrical Insulation Tape from Bhor Industries for a consideration of Rs 87 m.

At the current price of Rs 210 the stock trades at a P/E of 10x and market cap to sales of 1.1x FY02 earnings. Though the valuations are on the lower side of the FMCG spectrum, this is largely as a consequence of the general downturn in the economy, as well as the company's moves into other brands and products. However, in the longer term, it is company's focus on its branded adhesives business that will stand investors in good stead.

Equitymaster requests your view! Post a comment on "Pidilite: Some sticky issues". Click here!

  

More Views on News

PIDILITE INDUSTRIES 2020-21 Annual Report Analysis (Annual Result Update)

Oct 18, 2021 | Updated on Oct 18, 2021

Here's an analysis of the annual report of PIDILITE INDUSTRIES for 2020-21. It includes a full income statement, balance sheet and cash flow analysis of PIDILITE INDUSTRIES. Also includes updates on the valuation of PIDILITE INDUSTRIES.

Pidilite Results Review: Net Profit Spikes as Sales Rise 121% (Views On News)

Aug 12, 2021

Pidilite posts strong sales growth and a multi-fold jump in bottomline.

Pidilite Industries Q4 Net Profit Nearly Doubles Over Strong Operating Performance (Views On News)

May 14, 2021

Over the past one year, the company's stock has given 38% returns, lagging the benchmark Sensex, which rose 63% in the same period.

Adani Wilmar IPO to Hit the Market Soon. Should you Apply? (Views On News)

Nov 29, 2021

The parent company of the brand Fortune is set to raise Rs 45 bn from the market.

What Happens if ITC Hives off ITC Infotech? (Views On News)

Nov 20, 2021

The cigarette to hotel conglomerate is reportedly mulling the demerger of its software business at a valuation of around Rs 250 bn.

More Views on News

Most Popular

Infosys vs TCS: Which is Better? (Views On News)

Nov 26, 2021

In the post pandemic era, the top two IT companies in India are fighting to capture the growing demand for IT.

This Multibagger Stock Zooms 20% After Dolly Khanna Buys Stake (Views On News)

Nov 24, 2021

Shares of this edible oil company zoomed over 50% in three days after ace investor bought around 1% stake.

6 Popular Stocks that Turned into Penny Stocks (Views On News)

Nov 27, 2021

A look at popular stocks that crashed big time and never recovered, i.e. which went from 'Multibaggers to Multibeggers'.

India's Top 5 Monopoly Stocks to Watch Out for (Views On News)

Nov 30, 2021

These 5 companies dominate their sectors with a huge piece of the pie.

The Biggest Winners and Losers in India's Transition to Electric Vehicles (Profit Hunter)

Nov 26, 2021

How India's EV transition could be a major headwind for the incumbents.

More

Become A Smarter Investor
In Just 5 Minutes

Multibagger Stock Guide 2022
Get our special report Multibagger Stocks Guide (2022 Edition) Now!
We will never sell or rent your email id.
Please read our Terms

PIDILITE INDUSTRIES SHARE PRICE


Dec 7, 2021 10:55 AM

TRACK PIDILITE INDUSTRIES

  • Track your investment in PIDILITE INDUSTRIES with Equitymaster's Portfolio Tracker. Set live price alerts, get research alerts and more. Get access now...
  • Add To MyStocks

MORE ON PIDILITE INDUSTRIES

PIDILITE INDUSTRIES 8-QTR ANALYSIS

COMPARE PIDILITE INDUSTRIES WITH

MARKET STATS