28 January 2015
3QFY15 Results Update | Sector: Consumer
Equity Shares (m)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
Avg Val (INRm)/Vol ‘000
Free float (%)
Financials & Valuation (INR b)
2015E 2016E 2017E
TP: INR585 (+2%)
M.Cap. (INR b) / (USD b) 290.4/4.7
Marginally below estimates; earnings tailwind ahead
PIDI’s 3QFY15 results were slightly below expectations, with standalone sales
growth of 12.1% YoY to INR10.8b (est. INR11.3b) and an estimated ~7% volume in
the Consumer & Bazaar segment. EBITDA posted 22% growth to INR1.9b (est.
INR1.9b) aided by a lower base (1.5% growth in 3QFY14) and was in line, while PAT
was up 15.4% to INR1.24b (est. INR1.3b).
Gross margin contracted 70bp YoY
to 44.5% (est. 45.8%). Company had initiated
another round of price increase of 2-3% in December, full benefit of which
coupled with input price correction should reflect in 4QFY15. EBITDA margin
expanded 140bp YoY to 17.4% (est. 16.8%), largely due to a decline in other
expenses (down 280bp YoY).
However, higher depreciation costs (up 53.7% YoY), higher interest costs (up
39.6% YoY) and lower other income (down 41.2% YoY), moderated PBT growth to
14.7% YoY. The 50bp contraction in tax rate to 22.9% cushioned the impact on
earnings. Thus, Adj. PAT grew 15.4% YoY to INR1.2b (est. INR1.3b).
Consumer & Bazaar segment posted 12.9% sales growth, while
Industrial segment reported muted 5.2% growth. Consumer bazaar segmental
EBIT margin expanded 160bp YoY to 21.5%, with 21.4% EBIT growth. Industrial
segment margin expanded 300bp YoY to 12.3%, with 38.8% EBIT growth.
Sales, EBITDA and Adj. PAT posted 12.6%, 22% and 18.5% growth
respectively. Reported PAT grew 27.9% due to exceptional items.
Valuation and view:
We raise the estimates by 10-15% to incorporate lower input
cost assumptions and now model for 32% EPS CAGR over FY15E-17E. While
volume growth remains strong, current valuations at 36x FY16E and 30.4x FY17E
EPS are rich, in our view. Maintain
with a revised target price of INR585
(31x FY17E EPS, 20% premium to three-year average P/E, given expected strong
(Gautam.Duggad@MotilalOswal.com); +91 22 3982 5404
(Manish.Poddar@MotilalOswal.com); +91 22 3027 8029
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