Pidilitind: CMP: 3013: Long Term Gr: 16% | Current Year: 5% | FY_24 Result
(Strong Volume growth this quarter which triggered the improvement in the muted Sales growth of 5% this year)
The brand which was established in 1959 today is the Pioneer in Consumer & Specialty Chemicals. Pidilite is an adhesives manufacturing company. The company is the dominant and leading adhesives company in India. They have a strong history of creating strong brands. Among the most trusted brands in the country. Pidilite markets the Fevicol range of adhesives. Its other brands are FeviKwik, Dr. Fixit, Roff, Cyclo, Ranipal, Hobby Ideas, M-seal, and Acron. It also markets and manufactures WD-40 in India. Pidilite also manufactures products across verticals such as art materials and stationery; food and fabric care; car products, adhesives, and sealants; and specialty industrial products like adhesives, pigments; textile resins, leather chemicals, and construction chemicals. The Company has 20 overseas subsidiaries (6 direct and 14 step-down) and one joint venture, including those having manufacturing and selling operations in the USA, Brazil, Thailand, Dubai, Egypt, Sri Lanka, Bangladesh, and Kenya. Today 54% turnover comes from Adhesives & Sealants while 19.9% From Construction & Paint Chemicals.
Today it has emerged as leading market share in this industry, the best in this segment, with almost Debt Free Status, High margin & among the best ROE. Revenue & Profit during 2002 were 500 & 50 Cr respectively, while this year we saw the turnover of 12383 Cr with 1747 Cr profits. Revenue & Profit Growth of more than 20X. Hence, an investment of 1000 is already 200X i.e. Company with a consistent CAGR of 30% not for the last 5-10 years but for the last 25 years. Pidilite can cross the landmark 25000 Cr turnover in near till 2028 and should be in Nifty-50 in the next year.
Fy_24 Results: Sales this year were muted as it grew by just 5% over the same period last year yet this was better than estimated, since the beginning of the year we saw muted growth & it did not improve till Q3. or the current quarter, Volume growth was 15.2% with 12.7% in C&B businesses and 25.2% in B2B businesses. Current year`s revenue was underpinned by robust Underlying Volume Growth (‘UVG’) across categories and geographies along with mix improvement. Growth was broad based across Consumer and Bazaar (‘C&B’) and Business to Business (‘B2B’) segments with both segments reporting double digit UVG. Geographically, both Urban and Rural markets grew, with Rural markets outpacing Urban growth. Yet the growth we saw in Q4 was better than estimated by 8% v/s volume growth of 15.2% as prices have declined this year. Full Year growth was muted growth of 5% with improvements this quarter.
Gross Margins in the quarter was higher by 691 bps compared to last year's same quarter. EBITDA Margin for the quarter was 20.5% as compared to 18.4% last year. Input prices eased during the year leading to substantial expansion in Gross Margins (by 955 bps over FY23). Pidilitind continued to remain committed nurturing brands by substantially increasing investments in brands
and other growth-related initiatives. Standalone EBITDA Margins at 22.9% improved by 534 bps over FY23, after passing benefits of lower input costs
to customers and increased A&SP spends. Hence, Profits have grown by 36%.
Further We may see sales growth of 10% this year & Profits flat growth of negative 2% due to already margins at high & better last year. While there may be short term softness in the environment in near term, we continue to remain optimistic about market demand in the medium term, with overall increase in construction activities, government spending and increasing prosperity.
On the longer term growth of 13% is estimated which can take Pidilite to sales of landmark 50000 Cr till 2035.
New buying can be done during any correction near 2209 while Next year’s target of 3881 could be estimated where some 5% profits can be booked. Long term wealth creator where multiyear rally along with high and consistent dividend yield is expected.
Confident of the medium to long-term potential of the Indian home improvement sector and in their ability to deliver profitable volume growth.
70% holding is with promoters while 11% is with FPI along with 8% MF.
Disclosure: This Document was prepared for education purposes. We are not a tip provider.
