Pidilite Industries Q4 Results Review - Room For Margin Expansion: Dolat Capital

Dolat Capital Report

Pidilite Industries Ltd.’s Q4 FY23 results came in line with our estimates. Revenue growth was 7% - representing a four year compound annual growth rate of 13%.

Consumer Bazaar segment posted 10.4% growth while business-to-business segment declined 2%. The realignment of araldite business has impacted consumer and bazaar revenues by 200-300 bps. 

Domestic business reported 6.8% YoY growth. Consumer Bazaar/B2B segment reported 9.9/-3.3% sales growth respectively.

As vinyl acetate monomer prices have moderated, gross margin has improved 500 bps sequentially. We believe that the margins improvement would continue going ahead.

As Q4 performance was in line with our estimate, we have broadly maintained our FY24/25E earnings per share estimates at Rs 35.4/42.0.

Going ahead, we expect gross margin to improve with the drop in vinyl acetate monomer prices. Also, in the long run, the company’s strong brand portfolio and wide distribution reach would help accelerate its revenue growth. With high growth potential and leadership, Pidilite deserves high valuations.

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