28 May 2012
4QFY12 Results Update | Sector: Consumer
Equity Shares (m)
52-Week Range (INR)
1,6,12 Rel. Perf. (%)
M.Cap. (INR b)
M.Cap. (USD b)
Pidilite Industries (PIDI) reported better than expected results for 4QFY12. Adjusted PAT grew 42% YoY to
INR749m (v/s our estimate of INR566m) on sales of INR6.9b (v/s our estimate of INR6.7b). 4.4x increase in
other income and 270bp decline in tax rate boosted PAT growth.
Consumer and Bazaar sales grew 22.3% YoY, led by strong momentum in volume growth and pricing. EBIT
margin for this segment was up 40bp YoY.
Industrial Chemical sales grew 5% YoY after 2% YoY decline in 3QFY12. EBIT for the segment declined 19% YoY
and EBIT margin contracted 490bp YoY.
Continued robust growth in the Consumer and Bazaar segment, despite price hike in Fevicol indicates
strong consumer demand. Post a weak 3QFY12, the Industrial business has reported modest performance,
indicating improving exports scenario.
We note that PIDI benefited from declining VAM prices in 4Q, resulting in gross margin expansion of 350bp
QoQ. On a YoY basis, gross margin decline has reduced to 115bp from 330bp in 3QFY12.
Valuation and view
We remain positive on the volume growth scenario in Consumer and Bazaar products. Declining VAM prices
are also positive for the company. However, we remain cautious, as INR depreciation can negate the impact
of declining VAM prices on margins.
We estimate PAT CAGR of 25% over FY12-14 and our EPS estimates stand at INR8.3 for FY13 and INR10.1 for
with a target price of INR186.
(AmnishAggarwal@MotilalOswal.com); +91 22 3982 5404