PL First Cut - Pidilite Inds 1QFY24

PL First Cut – Pidilite Inds 1QFY24 – Amnish Aggarwal – Head of Research - Prabhudas Lilladher Pvt Ltd

Pidilite Inds 1QFY24: Revenues miss as margins surprise positively; C&B volume growth at 9%

(CMP: Rs2536|Hold)

Financial Performance

> Consolidated Revenues grew by 5.6% YoY to Rs32.8bn(PLe: Rs33.8bn)

> Gross margins expanded by 732bps YoY/223bps QoQ to 49%.(Ple: 48.0%)

> EBITDA grew by 33.5% YoY to Rs7.1bn (PLe:Rs6.6bn); Margins expanded by 451bps YoY/451bps QoQ to 21.6% (PLe:19.4%)

> PBT grew by 37.3% YoY to Rs 6.5bn(PLe: Rs5.8bn) Adj PAT grew by 34% YoY to Rs4.7bn (PLe:Rs4.4bn)

> Imputed Subsidiary Sales grew by 0.1% YoY to Rs3.1bn; EBITDA declined by 15.7% YoY to 356mn.

> Volumes in Consumer and Bazaar grew by 9% YoY

Segmentwise Performance

> Consumer and Bazaar Sales grew by 9.2% YoY to Rs26.6bn; EBIT grew by 32% YoY to 7078.2mn

> Industrial Products declined by 6.1% YoY to Rs6.8bn; EBIT grew by 22% YoY to 916.5mn

> IBD (ex-Pidilite USA) reported in-line sales vs last year due to uncertain economic conditions, currency devaluation and inflationary pressures. EBITDA was flat vs last year.

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PIDI posted revenue growth of 5.6% led by healthy domestic demand with C&B volume growth of 9%. Gross margins bounced back sharply with lower priced VAM inventory which enabled higher ad spends behind brands. VAM prices have dropped sharply starting from 2Q23 and spot VAM prices trade at USD 950/MT (-65% from peak). We expect margins to remain healthy barring any upward spike in VAM prices and currently factor in FY23-25 EPS CAGR of 37%. We have a Hold rating on the stock with a target price of Rs 2649.

Stock trades at 53.3x FY25 EPS.