MOSL: PIDILITE INDUSTRIES (Neutral)-Results better than expected on all fronts, but fair valuations limit upside
​Pidilite Industries: Results better than expected on all fronts, but fair valuations limit upside
(PIDI IN, Mkt Cap USD6.0b, CMP INR741, TP INR762, 3% Upside, Neutral)
- 4QFY17 performance better than expectations: Gross sales increased 6.8% YoY to INR14.0b. Net sales were up 4.9% YoY (est. of flat growth) at INR12.95b, with calculated 7% volume growth (est. flat) in the Consumer Bazaar segment. EBITDA was up 8.3% YoY (est. of -3% YoY) to INR2.58b, while adj. PAT declined 7.5% YoY (est. of -8.4%) to INR1.55b.
- Gross margin contracted 210bp YoY to 53.1%. EBITDA margin expanded 60bp YoY (est. of -60bp) to 19.9%. Staff costs increased 60bp YoY, while other expenses declined sharply by 330bp YoY, compensating for other cost increases. Higher tax rates (38.5% in 4QFY17 v/s 28.4% in 4QFY16) meant that adj. PAT declined by 7.5% YoY (est. of -8.4%) to INR1.55b.
- Consolidated segmental performance for 4QFY17: Consumer Bazaar revenue rose 7.6% YoY to INR11.6b. Industrial revenues grew 1.2% YoY to INR2.5b. Consumer Bazaar EBIT margin shrunk 50bp YoY to 22.9% and EBIT grew 5.3% YoY to INR2.7b. Industrial margin contracted 260bp to 16.1%, driving 12.8% segmental EBIT decline.
Pidilite Industries is engaged in the manufacturing and selling of consumer and bazaar products and speciality industrial chemical. Co.'s business is divided into three major segments: consumer & bazaar products, industrial products and other segments. Consumer & bazaar products consist of mainly adhesives, sealants, art materials and construction chemicals. Industrial products consists of organic pigments, industrial resins and industrial adhesives. Other segments consist of VAM manufacturing unit of Vinyl Chemicals (India) Ltd.
Motilal Oswal Financial Services Ltd. is a reputed name in Financial Services and Online Trading with group companies providing services such as Private Wealth Management, Retail Broking and Distribution, Institutional Broking, Asset Management, Investment Banking, Private Equity, Commodity Broking, Currency Broking, Principal Strategies & Home Finance.
Motilal Oswal Securities is a group company of Motilal Oswal Financial Service Limited which started as a stock trading company and has blossomed into well diversified firm offering a range of financial products and services. Motilal Oswal has built a reputation as the source for best stock trading company and this has taken a wealth of experience, knowledge and expertise, constantly working in tandem, over the years.
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