Pidilite Industries - Result Update - ICICI Securities

Pidilite's Q4FY20 performance was impacted by lockdown in March 2020 and exceptional losses of Rs. 33 crore incurred from impairment of elastomer project. Standalone revenue (85% of sales) fell 4% YoY led by same amount of drop in volume in Q4FY20. Further, volume of both segments viz. consumer & bazaar (C&B), B2B fell 3%, 4.5% YoY, respectively. Performance of subsidiaries was also impacted by Covid-19 related disruption globally. On the margin front, consolidated EBITDA margin increased 247 bps YoY led by a sharp increase in gross margin owing to benign raw material prices. However, bottomline was largely impacted by one time exceptional loss of Rs. 33 crore incurred due to impairment charges of elastomer projects. We believe while FY21E topline would be impacted by lockdown, lower input prices would help maintain gross margin at elevated level. We also believe debt free balance sheet and strong brand patronage would help Pidilite to a speedy recovery of lost sales with a revival in maintenance and construction activities. We cut our revenue, earnings estimate by 15%, 31%, respectively, for FY21E by factoring in lockdown impact.

Valuation & Outlook

At the CMP, the stock is trading at 76x FY21E and 53x FY22E earnings. While we remain structurally positive on Pidilite given its strong brand and balance sheet condition, the tepid volume growth in the medium term would weigh on valuations. We cut our revenue, earning estimate for FY21E by 15% and 31% respectively. We revised our rating from BUY to HOLD on the stock and maintain target price of Rs. 1485/share.

For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_PidiliteInd_Q4FY20.pdf

Shares of PIDILITE INDUSTRIES LTD. was last trading in BSE at Rs.1400.5 as compared to the previous close of Rs. 1390.9. The total number of shares traded during the day was 609762 in over 6403 trades.

The stock hit an intraday high of Rs. 1415 and intraday low of 1391. The net turnover during the day was Rs. 852456876.

Source : Equity Bulls

Keywords