Pidilite Industries Q3 Results Review - Margin Outlook Improving: ICICI Securities

ICICI Securities Report

Pidilite Industries Ltd. reported Q3 FY23 consolidated revenue growth of 5.2% YoY (three-year compound annual growth rate of 15.9%) on a high base, with consumer and bazaar segment revenue up 6.9% YoY.

Consolidated operating margin contracted 272 basis points YoY (flat QoQ) to 16.5% due to higher raw material costs (gross margin declined 175 bps YoY) resulting in Ebitda/PAT decline of 9.7%/15.2% YoY, respectively.

Management stated demand was healthy in tier-I to tier-III markets, but rural and semi-urban markets were lacklustre during the quarter.

Pidilite expects revival in those markets over the next six months aided by a good monsoon. They indicated the benefit of lower raw material costs should be seen from Q4 FY23 onward and that they are hopeful of margins returning to their historical as well as guided range of 20-24% in H1 CY23.

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