Pidilite Industries - 1QFY13 Results Update - Motilal Oswal

Pidilite Industries (PIDI) posted better than expected results for 1QFY13. Adjusted PAT grew 23% to INR1.3b (our estimate: INR1.2b) on sales of INR9.1b (our estimate: INR9b). Though the tax rate increased 270bp, doubling of other income boosted PAT.

- Consumer & Bazaar sales were up 21.6%, led by strong momentum in volume growth and pricing. EBIT margin in this segment was up 125bp.

- Industrial Chemicals sales grew 11.5%, while margin declined 270bp.

- Continued robust growth in the Consumer & Bazaar segment, despite price hike in Fevicol indicates strong demand. Post a weak 3QFY12, the Industrial business has shown revival, indicating an improving exports scenario.

- Despite flat gross margin, EBITDA margin expanded 110bp.

- We believe that PIDI will gain from declining VAM (vinyl acetate monomer) prices, which have softened to USD980/ton. We remain positive on the volume growth scenario in Consumer & Bazaar products despite the management's cautious outlook.

- We maintain our revenue and earnings estimates. We expect 22% CAGR in earnings over FY12-14E. The stock trades at 19.9x FY13E and 16.2x FY14E EPS. Buy.

Source : Equity Bulls

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