Pidilite Industry : Fevicol ka Jod

Is there a point you are trying to make? Below are the dividend dates for Pidilite

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The idea of the table is to clearly show that the company pays dividend every year, unlike the point being made in the post earlier. The payout ratio is what a company has a policy on and not the dividend yield.

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The person posted that Pidilite being such a great company has not yet paid a dividend. The only sensible response to that question is that Pidilite pays a dividend once a year as is clearly evident from its last history of dividend payout.

Also, payout is based on percentage of profits. And that for Pidilite has been 30% for a fair number of years, which is what I also put there.

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They pay once a calendar year and my guess is that they will announce a dividend with q4 results.

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For the shareholders there is no dividend income during FY21.

Excellent Presentation of Cost of Capital and Economic Value Addition in their AR:

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Wonder, does it have any listed peers in similar countries like China or Brazil…

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Team, do you have any views on pidilite looking at china +1 policy? This has been a consistent compounder but imo there have been many competitors now especially for favicol and related products. This co has good cash , roic is also good so far but they have utilize the cash to innovative and be aggresive.

Disc - not invested

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I have a query. when I look at its sales, profit performance , it appears quite ordinary on 3 , 5 and 10 years basis…still why stock performance is so good? I agree that its a Coffee Can stock and longevity is considered. But still, with this kind of business performance, why its getting so high PE and is it sustainable over next 5 to 10 years?

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Agree with you. I find it fascinating that a company that has grown revenues by 12% CAGR over the last 10 years is currently valued at 111x earnings. Sales have been inline, and margins are only 3% lower than recent average - not the case of suppressed earnings leading to high PE. Waiting for their Q2 results/earnings call to prove their might. Maybe it’s a good company currently being valued as a ‘great’ company?

If valuations return to normalcy (say 60x) even 15% growth might not amount to any significant returns in the next 5 years.

Insights welcomed.

Invested.

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This is going to sound subjective but a lot of new comers including myself would have some portion of their investments in these so- called safe stocks. Of course smaller stocks do give outsized returns but the number of great companies in India are still very limited. Specifically, those say dealing in cutting edge technologies. As long as that number stays low, money will continue to flow into these franchises and their PE multiples will continue to be high.

My two cents and invested in Pidilite

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Yes, I understand. This is the same reason I have this company in my portfolio. Over the time you begin to think in terms of what can go wrong, PE derating is one among many. The reason I am in constant debate with myself is that big companies like Pidilite were well known even 3 or 5 years ago and traded at 60-70x. Without any new trigger for growth or bullish guidelines from management or capex, to me it doesn’t make any sense why Mr. Market is valuing this company at > 100x. Hence, I decided to take my dilemma to this forum. But, whether we are right or maybe wrong would be impossible to say today - only time will tell. Cheers!

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Their products, Fevicol or Dr Fixit, have strong brand recall. Furthermore, your plumber or carpenter will ask for trusted brands, and will not risk experimenting with cheaper alternative. They don’t have to pay for it, and you, the buyer, won’t go against professional advice unless there is big difference in price.

PE derating could also happen via strong growth. We are seeing that in Dmart and Asian Paints. While the rest of the world is going into stagflation, Indian companies are showing strong recovery coming out of the effects of demonetisation and lockdowns. Hoping for good numbers tomorrow.

Disclosure: Invested in Dmart, Asian Paints, and Pidilite. Biased.

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Divyanshu, thank you for sharing your conviction.

Playing the devil’s advocate here, which one of the mentioned points was not true 3-5 years ago?
By how much should earnings grow to justify the increase in valuations by ~60% (60-70x to >100x)?

I am not at all denying the prowess of the said company, it is just that I feel Mr. Market sometimes overestimates the positives of a company and assigns a “too optimistic” valuation.

Asian Paints, as you mentioned, posted pretty strong numbers. Probably a tailwind in infra and buildings could bode well for the likes of Pidilite as well.
Let’s see.

Invested and closely monitoring.

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Both the market and Pidilite have grown during last 3-5 years, and so has its competitive advantages. The market cap of Pidilite tripled in last 5 years. With the benefit of hindsight, now we can say that Pidilite was undervalued 5 years back, even though it was quoting at high PE multiple back then.

What concerns us is whether we can still make the same statement 5 years later. Its result has been good, but it seems already priced in. Which I take as not a good sign, and have reduced my position here to chase better opportunities.

Pidilite results have yet again beaten all learned analyst’s estimates by huge margin.

This coming at a time when entire world is reeling under inflation, supply chain issues, receding demand and what not.

Inspite Crude being its largest raw material by cost and crude going through the roof…point to remember that this was not a systemic up move but rather an acute one which IMO should be even more difficult to handle QoQ basis but Pidilite came up with margin improvement speaks of the prowess of this company…

Had I been running this company, I would have probably not even achieved 1/10th of what they did since the years I started tracking and being invested in it.

No complains at all as an investor. Looking forward to huge market to capture in India & abroad and decade changing innovations, which this company has done before…Around 1L Cr mcap seems like a small cap to me with the huge run way ahead…

Disc: Invested & Highly biased. Not a buy/sell recommendation. Above thoughts are only for academic purposes and result of estimate beating results in one of most difficult quarter specially wrt to Crude. I can be wrong in all my assessments. Not eligible for any advice

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I used to think like this few years back, but if you see, to understand this concept, you got 3 times your invested amount in 5 years…However, when you bought it, it was already up 5 times in previous 5 years, 16 times in previous 10 years and whopping 133 times in previous 20 years!!! (Approx. figures)

So, you had the same risk 5 years back as well…either you were very lucky to have managed 3 times in this 5 years inspite of this stock going up 133 times in previous 20 years…or there is something else to investing in such cases…

No conclusions just thoughts, Happy Investing…Cheers!

Disc: Same as above

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Can anyone provide the volume and value numbers for pidilite from last 5 yeats till 2022?
I want to know the comparison pf 5yr and 3yr growth in volumes vs value vs sales

if one has somehow justify high valuation of pidilite, can say it goes on creating new product categories to grow(pioneers). secondly there is no threat to business n whatever moderate growth they are making from competition(most or say assured visibility of future growth).

but having said that ,current valuation multiples, especially post-covid are very very uncomfortable.

Disc: invested for over two decades, forming 1/5th of folio.

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