Pidilite Industry : Fevicol ka Jod

Highlights of the Concall by Capital Mkt;

  • Material cost as % of net sales increased by 370 bps on a consolidated basis for Q4FY’14 mainly due to increase in cost of VAM, key raw material for the company, caused by global demand supply mismatch and higher US $ rate in the quarter as compared to the same quarter last year
  • Sales of Consumer and Bazaar products division increased 18% to Rs 781.94 crore for the quarter ended March 2014 compared to corresponding previous year period representing 77% of total revenues of the company. PBIT decreased 12% at Rs 107.29 crore, which was 88% of total PBIT due to higher input costs and higher A & SP spends
  • Industrial Products division contributed 22% of the company’s total revenues in Q4FY’14 which rose 17% to Rs 219.33 crore led by strong growth in exports. The PBIT reported 21% decrease to Rs 18.36 crore mainly due to higher input costs.
  • The company has hiked prices of some products in May’14, by 4-6%, and it further plans to raise them in 2QFY15
  • Despite increase in prices it expects pressure on its gross margin to continue because of the higher raw-material prices. VAM prices were up by 40% y-o-y. The company expects prices of VAM to be high in the next two quarters as well
  • VAM prices were higher as its supply was disrupted due to closure of some plants globally.
  • The company expects rupee appreciation would help reduce the impact of the elevated raw-material prices.
  • The company has guided an effective tax rate of 25-26% in FY16
  • The company does not have any major capex planned for FY’15 and FY’16 and capex in these two years would be in line with that in earlier years.
  • Volume growth in FY14 came in double digits
  • International segment posted 5.5% sales growth in constant currency terms
  • Sales growth is higher in smaller towns due to better distribution reach and increased consumer awareness

North America:

  • Sales of Cyclo (Car care chemicals) business grew by 4.8% for Q4FY’14**.**Sales of Sargent Art (Art Materials) business declined 12.4% mainly due to the impact of adverse weather resulting in delay in shipments.
  • Gross margins improved by 260 bps for Q4FY’14 over last year due to price increase and other margin improvement initiatives taken during the year. EBITDA loss during quarter declined by 69% to Rs 8.6 Million due to improvement in margin and provision for doubtful debts of a large customer last year
  • Sales of Cyclo business grew by 3.5 % and sales of Sargent Art business grew by 1.4% for FY’14. Gross margins improved by 200 bps. EBIDTA grew by 195% due to improvement in margins and provision for doubtful debts of a large customer last year.

South America:

  • Sales grew by 3.6% for Q4FY’14. Gross margins improved by 420 bps over LY. EBITDA loss increased from Rs 59.7 Million to Rs. 112.5 Million due to low sales growth, costs related to restructuring of manufacturing operations and higher legal & tax expenses / provisions.
  • Sales grew by 18.5% for FY’14 and gross margins improved by 790 bps. SG&A expenses increased by 15%. Despite healthy growth in sales and improvement in margins, loss at EBIDTA level declined by only 7.3% due to costs related to restructuring of manufacturing operations and higher legal & tax expenses / provisions.

Middle East & Africa:

  • Sales grew by 47.3% for Q4FY’14 and loss at EBIDTA level declined by 68.6%. The sales growth improved both in Dubai & Egypt.
  • Sales grew by 10.8% for FY’14 due to recovery in Q4. The subsidiaries in Egypt recovered during the year and reported an EBITDA profit of 7.9 Mn as against EBITDA loss of 1.6 Million last year. The improvement was led by growth in sales and margin improvement by 200 bps.

South & South East Asia:

  • Sales grew by 11.9% for Q4FY’14 & EBIDTA grew by 17.8% over last year.

  • Sales grew by 24.3% for FY’14 and EBIDTA increased by 59.1%.

This is what Livemint says about Pidilite. Prices going down because of increase in raw material costs.

Pidilite Industries Ltd, which makes adhesives and construction chemicals, may continue to underperform the market as a sharp jump in input costs will affect margins and profitability in the near term.

Pidilite shares have fallen 6% in the past four trading sessions after some brokerage firms cut their earnings estimate after operating margins declined steeply in the March quarter. India Infoline Research and Religare Institutional Research have slashed the earnings estimate for 2014-15 by 4% and 5%, respectively.

Raw material costs as a percentage of net sales grew 376 basis points to 57% from a year ago in the March quarter due to a sharp 40% jump in the cost of vinyl acetate monomer, a key raw material. A basis point is one-hundredth of a percentage point. This was mainly on account of a global supply mismatch after two plants were shut in the US. While Pidilite raised prices by 4-5% during the quarter, it was not able to offset the impact of higher input costs on the operating profit margin, which declined to a five-and-half year low of 10.44%, down 360 basis points from a year ago.

While the company did see some improvement in demand, with volume growth picking up to 12-13%, it may not be enough to cushion the margins. The consumer and bazaar products segment, which contributes slightly less than three-fourths of sales, grew 18%, and the industrial product segment sales grew 17.2%, led by strong growth in exports.

The companyâs overseas subsidiary, which contributes around 10% of consolidated sales, saw an improvement in revenue and reported an operational profit in 2013-14 compared with a loss in the preceding fiscal year. The rise in input costs weighed on consolidated net profit, which fell 10.2% to Rs.718.3 crore. Net sales grew more than 18% to Rs.985 crore.

Pidiliteâs shares have lagged the market in the past one year. The stock is trading at a price-earnings multiple of 22 and will remain under pressure in the near term unless margin concerns ease.

Highlights of the Concall by Capital Mkt;

Consolidated Performance

  • Net sales at Rs 1338.1 crore grew by 19.6% over the same quarter last year.
  • Material cost as % of net sales increased by 272 bps mainly due to increase in cost of VAM, a key raw material for the company, caused by global demand supply mismatch.
  • EBITDA from operations, before other income, finance costs & exceptional items, grew by 5.1% mainly due to higher material cost.PBT at Rs 225.9 crore grew by 2.1%.PAT at Rs 167.7 crore grew by 3.8%
  • PBIT margins fell 410 bps to 18.9% in Q1FY’15 led by 410 bps decline in Consumer and Bazaar segment PBIT margins to 21.6% and 290 bps decrease in Industrial product segment PBIT margin to 7.4%

Standalone Performance

  • Net sales at Rs 1207.2 crore grew by 19.5% over same quarter last year. This was driven by a 20.8% growth in sales of consumer & bazaar products and 16.4% growth in industrial products.Material cost as % of sales increased by 291 bps mainly due to increase in cost of VAM and higher US $ rate.
  • EBITDA from operations before other income, finance costs & exceptional items grew by 4.4% mainly due to higher material cost.Depreciation for the quarter increased by Rs.4.63 crore during Q1FY’15 as the management has decided to adopt the useful lives as suggested in Part C of Schedule II of the Companies Act 2013 with effect from 1st April, 2014 for all its fixed assets
  • In accordance with the transitional provisions under note 7(b) to part C of Schedule II of the Act, the company has adjusted an estimated amount of Rs. 13.43 crore (net of deferred tax of Rs. 6.92 crore) in the retained earnings, pertaining to assets whose balance useful life was NIL as at 1st April, 2014.Gain from Foreign exchange difference is lower at Rs 0.33 crore as against Rs 7.68 crore in Q1 last year.
  • Profit from operations before other income, finance costs & exceptional items grew by 1.1% mainly due to increase in depreciation cost. Profit Before Tax at Rs 221.9 crore and is same as last year.

North America:

  • Sales of Cyclo (Car care chemicals) business declined 4.4% mainly due to lower exports. Gross margins are in same line as same quarter last year.
  • Sales of Sargent Art (Art Materials) business grew 47.3% due to increased orders from retail chains. Gross margins declined by 3% mainly due to change in customer mix.
  • EBITDA for the quarter grew by 26% to Rs 4.66 crore due to high sales growth.

South America:

  • Sales declined by 1.3% as the markets were partly closed for most part of June 2014 for the world cup. Gross margins are same as LY. EBITDA loss increased from Rs 1.55 crore to Rs. 1.74 crore due to low sales growth & costs related to restructuring of manufacturing operations.

Middle East & Africa:

  • Sales grew by 63.2% and loss at EBIDTA level declined by 81.2%. Sales of the subsidiary in Dubai grew by 227% & that of the Egypt businesses grew by 9.9%.

South & South East Asia:

  • Sales grew by 33.6% & EBIDTA grew by 31.9% over last year. Sales in Bangladesh grew by 34.3% and Thailand grew by 29.5%.

Others

  • The company took a price hike of around 3-3.5% in the month of May 2014. However this price hike was not adequate to offset increase in input price hike.Full benefit of price hike taken in May 2014 would be visible in Q2FY’15.Thecompany plans another price hike in August 2014 similar to around 3-3.5% taken in May 2014

  • The company expects VAM prices to soften in near term.The company expects tax rate to remain similar in FY’15 as in FY’14Total investment in Elastomer project till 30thJune 2014 is Rs 370 crore. The company has no update to share regarding Elastomer project.

  • There are 2 operating Indian subsidiaries namely Building Envelope Systems India (BESI) and Percept Waterproofing Services (PWSL). BESI commenced operations in November 2013 and PWSL started in Feburary 2014. Total sales from these two subsidiaries was Rs 7 crore and Profit after tax was Rs 0.17 crore.

Highlights of the Concall by Capital Mkt;

  • Pidilite Industries posted a 14% rise in consolidated topline to Rs 1254.64 crore in quarter ended September 2014 compared to corresponding previous year period. 14% increase in net sales was led by 15% increase in Consumer and bazaar segment revenue and 8% increase in Industrial products segment.International business revenue in constant currency grew by 6.3% during the quarter. However, due to translation impact the reported sales show a growth of 5.0%.Domestic business volume growth in Q2FY’15 was 10% on a y-o-y basis.
  • The company expects EBITDA margin to improve in coming quarters as input costs is turning benign with full effect of price hikes and gains in distribution costs (cut in diesel prices).Margins for the current quarter was impacted by firm VAM prices (Vinyl Acetate Monomer) since the past 3-4 quarters.The company has affected 2 rounds of price hikes, 3.5% in Q1FY15 and 3% in Q2FY15, the full effect of which would be visible from Q3FY15.The management highlighted that VAM price increases seems to have peaked out, while other raw materials have been largely benign.Effect of price hikes coupled with benign raw material prices would improve EBITDA margin in the coming quarters
  • Tax rates could be higher in FY’16 and beyond as few facilities would move out of tax exemption zone in FY15.During the quarter the company acquired the adhesive business of Bluecoat Private Limited on a slump sale basis for a consideration of Rs 2.63 billion. The business manufactures and sells adhesive under the brand name “Bluecoat”.

Consolidated Performance

  • Net sales at Rs 1248.6 crore grew by 14.1% over the same quarter last year.EBIDTA, before non-operating income & exceptional items at Rs 206.3 crore grew by 9.1%.As per the requirement of the provisions of Schedule II of the Companies Act, 2013 (the “Act”), the Management has decided to adopt the useful lives as suggested in Part C of Schedule II of the Act with effect from 1st April, 2014 for all its fixed assets. Accordingly, depreciation for the quarter is higher by Rs. 102.9 Million.
  • OI is higher by 83.6% to Rs 15.1 crore due to higher profit from sale of invt.PBTin current quarter is Rs 187.3 crore, a growth of 9.6%.PBIT margins fell 290 bps to 18.3% in Q2FY’15 led by 310 bps decline in Consumer and Bazaar segment PBIT margins to 20.5% and 140 bps decrease in Industrial product segment PBIT margin to 9.5%

Standalone Performance

  • Net sales at Rs 1129.4 crore grew by 14.6% over same quarter last year. This was driven by a 15.9% growth in sales of Consumer & Bazaar products and 7.7% growth in Industrial Products.Material cost to sales % is higher than same quarter last year by 80 Bps primarily due to increase in VAM prices caused by global demand supply imbalance.Other expenses during the quarter were higher than last year by 11.5%.EBITDA, before non-operating income & exceptional items at Rs 202.5 crore is higher by 10.2% over the same quarter last year.OI is higher by 55.4% to Rs 13.5 crore due to higher profit from sale of invt.PBT at Rs 185.7 crore is higher than last year by 11.5% and PAT is higher by 14.2%.

**North America:**For the Quarter: Sales of Cyclo (Car care chemicals) grew by 13.1% and that of Sargent Art (Art Materials) grew by 1.6%. Margins in Cyclo business improved by 130 bps due to growth in international business and margins in Sargent Art improved 100 bps. EBITDA improved by 3.3% to Rs 4.09 crore.For the Half year ended 30th September 2014: Sales of Sargent Art grew by 26.2% and that of Cyclo grew by 4.3%. EBIDTA grew by 18.7% due to higher sales, improvement in margins and lower SGA.

**South America:**For the Quarter: Sales declined by 3.9%. Margins improved by 190 bps over last year due to price increase and improvement in product mix. However loss at EBIDTA level increased from Rs 0.98 crore to Rs. 2.54 crore mainly due to decline in sales & higher one-time expenses.For the Half year ended 30th September 2014: Sales declined by 2.7%.Loss at EBIDTA level is higher due to lower sales

**Middle East & Africa:**For the Quarter: Sales grew by 57.6% and loss at EBIDTA level declined by 78.2%. The sales growth improved both in Dubai & Egypt.For the Half year ended 30th September 2014: Sales grew by 60.6%, with Egypt growing at 22.0% and Dubai sales grew by 183%. Loss at EBITDA level declined by 80.4% to Rs 6.3 M mainly due to high sales growth.

**South & South East Asia:**For the Quarter: Sales grew by 4.4% & EBIDTA was same as last year as the increases in input costs could not be passed on fully through price increases.For the Half year ended 30th September 2014: Sales grew by 19.7% and EBIDTA increased by 16.6%.

Thanks hemant for that

I wanted to know from where do you acess concall highlihgts of any company, On capital markets website, I couldn"t locate this. If possible can you Pls share the link

Thnaks again !

Highlights of the Concall by Capital Mkt;

  • Pidilite Industries posted a 12% rise in consolidated topline to Rs 1202.19 crore in quarter ended December 2014 compared to corresponding previous year period with 130 bps increase in operating profit margins to 16.1% leading 22% increase in operating profit to Rs 193.41 crore. Bottomline of the company rose 28% to Rs 124.36 crore. 12% increase in net sales was led by 13% increase in Consumer and bazaar segment revenue and 5% increase in Industrial products segment.

  • PBIT margins rose 170 bps to 17.4% in Q3FY’15 led by 130 bps rise in Consumer and Bazaar segment PBIT margins to 18.9% while Industrial product segment PBIT margin rose 300 bps to 12.3%.International business revenue in constant currency grew by 10% during the quarter. However, due to translation impact the reported sales show a growth of 15%.

  • The company took another round of price increase of 2-3% in December 2014, full benefit of which would be visible in 4QFY15. Earlier the company had affected 2 rounds of price hikes, 3.5% in Q1FY15 and 3% in Q2FY15.

  • Pidilite Industries standalone sales grew 12.1% YoY to Rs 1081.58 crore with an estimated volume growth of around 8% in both the Consumer & Bazaar segment and Industrial segment.

  • US business grew by around 8.5%. Sales of Cyclo (Car care chemicals) grew by 4% and that of Sargent Art (Art Materials) grew by 14% in Q3FY’15.Brazil was a tough quarter in Q3FY’15 as its economy remains challenged and impacted by weaker currency and high inflation. Topline declined by 3% while margins were higher by 20 bps. Loss at EBITDA level remains same as in last year.Sales in Egypt grew by around 26% while Dubai sales grew by 30%. Losses in Middle East and Africa business declined significantly.South & South East AsiaSales grew by 8% & EBIDTA by 4%. Bangladesh business did very well while Thailand was a soft quarter.

  • VAM prices have eased by around 20% from its peak to nearly US$1200 per tonne.VAM (a derivative of Crude Oil) is the key raw material for the company and constitutes nearly 18% of overall raw material expense. Nearly 50% of Pidlite Industries raw materials are derivative of crude oil. The recent correction in crude oil price would benefit the company with a lag of 2-3 quarters.Management has stated that full benefit of correction in VAM prices is expected to flow in FY16.

  • Management expects Brazil subsidiary to recover in FY16 on back of various restructuring measures taken by the company.

Highlights of the Concall by Capital Mkt
Pidilite Industries posted a 5% rise in consolidated topline to Rs 1043.53 crore in quarter ended March 2015 compared to corresponding previous year period with 240 bps increase in operating profit margins to 12.8% leading 30% increase in operating profit to Rs 133.86 crore. Bottomline of the company rose 10% to Rs 80.62 crore. 5% increase in net sales was led by 8% increase in Consumer and bazaar segment revenue and 2% decrease in Industrial products segment.PBIT margins rose 210 bps to 14.3% in Q4FY’15 led by 140 bps rise in Consumer and Bazaar segment PBIT margins to 15.1% while Industrial product segment PBIT margin rose 500 bps to 13.4%.
Total domestic volume growth was 3.1% in Q4FY’15 as Consumer & bazaar posts 5.5% volume growth while industrial business decline by 1.6% impacted by pricing action and tepid demand. Total FY’15 volume growth was 8.7%. The company expects demand sentiments to be muted in H1FY16, but expect pick up in second half.International business revenue in constant currency grew by 10% during the quarter. However, but favorable currencyand addition of distribution business in the Dubai subsidiary led to 22% yoy revenue growth
North America sales were flat due to adverse weather condition. Sales of Cyclo (Car care chemicals) fell by 14% and that of Sargent Art (Art Materials) grew by 22% in Q4FY’15.South America grew 26.9% yoy aided by low base with EBITDA margin improving 340bps due to price hikes.Middle East & Africa continue its growth trajectory led by traction in markets like Egypt and Dubai and addition of revenues of distribution business of Pidilite to Dubai subsidiary.South East Asia grew by 9% yoy, however EBITDA grew by 50% yoy led by better product mix
VAM prices were lower at about US$1000-1080 per tonne.Advertising expenditure for FY15 was 4.2-4.3% of total sales. The company is not looking at meaningful change in this in FY16. In Q415 the advertising expenditure was 6.3%.The company expects tax rate of 27% in FY’16 as 3 units in Himachal has completed 10 year tax holiday.The company has planned capex of Rs INR 175-200 crore in FY16

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Highlights of the Concall by Capital Mkt
During the quarter, Nina Waterproofing Systems Private Ltd. (NWSL), a subsidiary of Pidilite Industries Limited (PIL), has acquired the waterproofing business of Nina Concrete Systems Private Ltd. (NCS) on a slump sale basis. PIL holds 70% of the paid up capital in NWSL. The results include the performance of NWSL.Consolidated net sales at Rs 1462.2 crore grew by 9.3% over the same quarter last year. Total expenses during the quarter were higher by 9.2%.EBIDTA, before non-operating income & exceptional items at Rs 343.7 crore grew by 43.0%. Profit before tax in current quarter is Rs 318.7 crore, a growth of 41.1% and Profitafter Tax at Rs 226.1 crore is higher by 34.8%.Material cost, as a % to consolidated sale, is lower than same quarter last year by 513 Bps mainly on account of lower prices of key raw materials & price increases taken last year.
Standalone net sales at Rs 1298.4 crore grew by 7.5% over same quarter last year. This was driven by a 7.4% growth in sales of Consumer & Bazaar products whereas Industrial Products grew by 0.7%. Total expenses during the quarter were higher by 6.9%. EBITDA, before non-operating income & exceptional items at Rs 327.8 crore is higher by 40.7% over the same quarter last year. Other income is lower by 45.9% due to lower investment income.Last year the company had incurred an exceptional cost on voluntary retirementscheme of Rs 4.91 crore which is Nil in current year. Profit before Tax at Rs 308.1 is higher than last year by 38.9% and Profit after Tax is higher by 33.6%.Domestic volumes saw modest growth at 5% with consumer & bazaar growth at 7.4%, while industrial was flat impact by weak industrial activity. No change in demand sentiments is seen yet, but a likely uptick in urban demand and favorable H2 of FY16 are key growth triggers
International business revenue in constant currency grew by 7% during the quarter. However, due to translation impact the reported sales show a growth of 3.9%.North America sales growth was high in Q1 of last year due to initial ordersfrom a new large customer. Sales declined by 6.8% as compared to high salesbase of last year. EBITDA at Rs 7.55 crore grew by 4% due to improvement incustomer & product mix and control on SGA expenses.
South America sales in April - June quarter were lower than last year due to difficulties in Brazil economy. Losses at EBITDA level declined by 16 % due to lower SGA expenses.Sales grew by 121.7% in Dubai largely due to transition from third party distribution to own distribution model for Pidilite industries products inthe region. Adjusting for this revenue, sales declined by 68% over same quarter last year. Egypt sales grew by 4.9%. Loss at EBIDTA level increased to Rs 1.89 crore due to higher SG&A expenses.
Sales grew by 66.1% in Bangladesh whereas sales declined by 9.1% in Thailand. EBIDTA increased by 56.6% mainly due to lower material costs.

Highlights of the Concall by Capital Mkt
Net sales stood at Rs 1313.4 crore grew by 5.2% over the same quarter last year. Material cost, as a % to sale, is lower than same quarter last year by 778 bps mainly on account of lower prices of key raw materials. EBITDA stood at Rs.301.4 crore grew by 46.1%. Profit before tax in current quarter is Rs. 276.5 crore, a growth of 47.6% and Profit after tax stood at Rs 192.9 crore is higher by 40.5%.PBIT margins rose 690 bps to 24.6% in Q2FY’16 led by 660 bps rise in Consumer and Bazaar segment PBIT margins to 26.1% while Industrial product segment PBIT margin rose 600 bps to 17.5%.
Consumer and Bazaar segment revenue grew by 5.2% during Q2FY’16 compared to Q2FY’15 while segment profit before interest and tax (PBIT) grew by 38%. For H1FY’16 Segment revenue grew by 6.4% & segment profit beforeinterest and tax (PBIT) grew by 36.1%.
Industrial products segment revenue declined by 9.1% during Q2FY’16 compared to Q2FY’15 while segment PBIT for the quarter grew by 38.6%.For H1FY’16 Segment revenue declined by 4.3% & segment PBIT grew by 64.9% due to lower input costs.Sales in constant currency grew by 20% during the quarter. However, due to translation impact the reported sales show a growth of 10.9%.
North America sales recorded a growth of 6.9% for the quarter while EBITDA for the region improved by 57.9% on account of higher sales and improvement in margins due to various cost saving initiatives. For the Half year ended 30th September 2015 sales declined by 0.8% while EBITDA improved by 50.2%.
South America sales declined 1.9% for the quarter. Brazil business was impacted due to continued slowdown of the economy. Losses at EBITDA level reduced by 35.3%. Manufacturing and SG&A expenses were lower than last year due to the structural changes and other cost saving initiatives implemented. For the Half year ended 30th September 2015 sales declined by 4.3%.Loss at EBITDA level reduced by 24.7%.
Middle East & Africa sales grew by 117% for teh quarter largely due to commencement of distribution of Pidilite Industries products in the region, which hitherto was being done by a third party distributor. Adjusting for this revenue, sales were lower than last year. Loss at EBIDTA level increased by Rs 2.41 crore due to lower sales and higher SG&A expenses to support future sales growth in this region.
South & South East Asia sales grew by 26.2% for the quarter. EBIDTA grew by 36.3% due to good sales growth and reduction of material cost.The company expects tax rate of 30% for FY’16 which is further expected to increase in FY’17.VAM prices during the quarter were around USD 900-925 per tonne which corrected on QoQ basis. Currently prices are now below USD 900 per tonne

Excellent nos by pidilite.

CONFERENCE CALL

Pidilite Industries

Raw material continues to remain soft.

Pidilite Industries held a conference call to discuss the results for the quarter ended December 2015 and way forward. Senior Management of the company addressed the call
Highlights of the Concall

Consolidated net sales grew by 11.4% at Rs 1332.3 crore during Q3FY’16 over the same quarter last year. Material cost, as a % to sale, is lower than same quarter last year by 748 bps mainly on account of lower prices of key raw materials. Other expenses during the quarter were higher than last year by 16.5%. EBITDA, before non-operating income & exceptional items at Rs 295.3 crore grew by 52.7%.Profit before tax in current quarter is Rs 268.1 crore, a growth of 65.7% and Profit after tax at Rs 185.9 crore is higher by 49.8%.
Standalone net sales at Rs 1169.9 crore during Q3FY’16 grew by 8.8% over same quarter last year. This was driven by 10.8% growth in sales of Consumer & Bazaar products and 3.1% growth in sale of Industrial Products. Material cost, as a % to sale, is lower than same quarter last year by 779 bps mainly on account of lower prices of key raw materials and price increases taken during the year. Other expenses during the quarter were higher than last year by 11.2%. EBITDA, before non-operating income & exceptional items at Rs 286.8 crore is higher by 52.4% over the same quarter last year. Other income is higher by 101% due to higher investment income. Profit before tax at Rs 264.5 crore is higher than last year by 64.6% and Profit after tax at Rs.185.7 crore is higher by 50.1%.
Consumer and Bazar segment revenue grew by 10.8% during Q3FY’16 led by 11% volume growth while segment Profit before interest and tax (PBIT) grew by 49.2%. Volume was largely driven by festive demand.
Industrial Products segment revenue grew by 3.1% during Q3FY’16 while segment PBIT for the quarter grew by 46.5 %.
Raw material including VAM continues to remain soft.
North America sales grew by 22 % during Q3FY’16 due to good sales growth of both art material and automotive chemical business. EBITDA grew by 169 % due to good sales growth and improvement in gross margins
Business in Brazil was impacted by the economic slowdown resulting in drop in sales by 17% over LY. Despite the sales drop, EBITDA loss was contained at Rs 2.5 million mainly due to improved gross margin and reduction in SG&A cost.
Sales in South and South East Asia grew by 60% driven by 1) Improved market penetration and introduction of new products in Bangladesh 2) Acquisition of business and start of distribution operation in Sri Lanka 3) Good growth in project segment in Thailand. EBITDA grew by 71%.
Middle East Sales grew by 63 % largely due to commencement of distribution of Pidilite Industries products in the region, which hitherto was being done by a third party distributor. Sales of products manufactured in Middle East grew by 8%
During the quarter the Company along with its wholly owned subsidiary Fevicol Company incorporated Wood Coat Private Limited to be engaged in all types of coatings for wood including wood stains, fillers, primers, wood finish etc.
During the quarter Building System Solution Trading L.L.C. was incorporated in Qatar as a wholly controlled subsidiary to be engaged in trading of Construction Chemicals in which Pidilite Middle East Ltd., (a wholly owned subsidiary) is the shareholder.
During the quarter Plus Call Technical Services L.L.C.- Dubai was incorporated in October, 2015 as a 40% joint venture of Pidilite Middle East Ltd (a wholly owned subsidiary) with a local operating partner. On 28th November, 2015, the Company (Plus Call Technical Services L.L.C.) has entered into Assets Transfer agreement to acquire business from another company; the process of transition of the same is under way. Accordingly, the results for December 2015 do not include the 40% share of Plus Call Technical Services L.L.C. and the impact is considered to be not material.

CONFERENCE CALL - from Capital markets

Monsoon will provide boost to demand

Pidilite Industries held a conference call to discuss the results for the quarter ended March 2016 and way forward. Senior Management of the company addressed the call

Highlights of the Concall

  • Consolidated net sales at Rs 1233.5 crore in Q4FY’16 grew by 18.9% over the same quarter last year. Material cost, as a % to sale, is lower than same quarter last year by 734 bps mainly on account of lower prices of key raw materials. Other expenses during the quarter were higher than last year by 21.5%. EBITDA, before non-operating income & exceptional items, stood at Rs 238.4 crore grew by 78.1%. Profit before tax in current quarter is Rs 215.3 crore, a growth of 109.1% and Profit after tax at Rs 151.5 crore is higher by 90.6%.
  • Consolidated net sales for FY’16 stood at Rs 5341.4 crore grew by 10.8% over the same period last year. Material cost, as a % to sale, is lower than same period last year by 694 bps mainly on account of lower prices of key raw materials & impact of price increases. Other expenses during the period were higher than last year by 14.6%. EBITDA, before non-operating income & exceptional items at Rs 1178.7 crore grew by 51.8%. Profit before tax (before exceptional items) at Rs. 1078.5 crore is higher than last year by 57.9%. Profit after tax at Rs. 756.4 crore grew by 48.7%.
  • Consumer and Bazaar segment revenue grew by 12.4% in Q4FY’16 while segment profit before interest and tax (PBIT) grew by 61.8%. For FY’16 segment revenue grew by 8.7% & segment profit before interest and tax (PBIT) grew by 43.9%.
  • Industrial segment revenue grew by 7.5% in Q4FY’16 while segment PBIT for the quarter grew by 60.8%. For FY’16 segment revenue grew by 0.3% & segment PBIT grew by 58.9% due to lower input costs.
  • Net sales of overseas subsidiaries in Q4FY’16 grew by 35% at constant currency. Considering the movement of currencies, the reported sales growth is 48%. EBITDA (before one-off items) was at Rs 5.7 crore as compared to Rs 5 million during the same period last year.
  • North America sales in Q4FY’16 grew by 41% due to good sales growth of art and craft materials. EBITDA grew by 52 % due to higher sales and improved product mix. For FY’16 sales grew by 13% and EBIDTA grew by 112%.
  • South America business in Q4FY’16 in Brazil was impacted by the economic slowdown resulting in drop in sales by 1% over LY. Despite the sales drop, business delivered EBITDA (before one–off items) of Rs 1.2 crore mainly due to improved gross margin and reduction in fixed overhead cost. For FY’16 sales declined 7% and EBITDA loss (before one-off items) reduced by 72%.
  • Sales in SAARC in Q4FY’16 grew by 133% driven by 1) Improved geographical distribution and marketing efforts in Bangladesh 2) Acquisition of business, expansion of distribution and local toll blending operations in Sri Lanka. EBITDA grew by 85% over last year same quarter. For FY’16 sales grew by 84% and EBITDA grew by 98% over same period last year.
  • Sales in South and South East Asia in Q4FY’16 grew by 8%. Reduced commodity prices, better product mix and lower SG&A spend resulted in EBITDA (before one-off items) growing by 85%. For FY’16 sales grew by 7% and EBITDA (before one-off items) grew by 24%.
  • MEA (Middle East & Africa): Sales grew by 38 % in Q4FY’16 largely contributed by 33% growth in products manufactured in the region and start of JV operations in ME. EBITDA loss was at Rs 4.78 crore due to higher SG&A expenses and delay in ramp up of sales. For FY’16 sales grew by 66% largely due to higher sales from the distribution of Pidilite Industries products in the region which for most part of last year was being done by a third party distributor. EBIDTA loss was at Rs 13.4 crore due to higher SGA expenses and delay in ramp up of sales.
  • The company has made several attempts in the past few years to find a strategic partner for the Synthetic elastomer project. While several parties showed interest, discussions have not yet progressed sufficiently. The company intends to intensify its efforts in search of a strategic partner in the coming financial year. In the meantime, the company intends to utilize Dahej site for manufacturing Adhesives and other products for the export market.
  • Pidilite Industries has set up a JV with Industria Chimica Adriatica Spa (ICA), Italy for wood finish business with total equity investment of Rs 63.7 crore. As a part of Joint Venture, Pidilite Industries and its wholly owned subsidiary will hold 50% of shareholding of Wood Coat Pvt. Ltd and balance 50% will be held by ICA and Italcoats, a partnership firm and distributor of ICA wood finish in India. ICA through its partnership in Italcoats has 110 member strong team presence in India and has 14 ICA-brand showroom and a network of 45 distributors and 1800 dealers. The JV will acquire current food finish distributor business of Italcoats and will be exclusive distributor of ICA wood finish in India and other select countries. The JV will also acquire technology and knowhow for manufacture of select wood finish products from ICA and shall be entitled to manufacture, market, distribute and sale of ICA wood finish products in India and select countries.
  • The company feels current margins are not sustainable and are reflection of lower crude oil prices.
  • The company expects monsoon will provide boost to demand.
  • VAM prices are in the range of US$ 900-1000. VAM prices may rise with lag, following crude.
  • The company expects tax rate to reach full marginal rate over the next 3-4 years

Any reason for the sudden spurt in price action apart from the buoyant market? Meanwhile Pidilite is expanding ROFF centers http://www.thehindubusinessline.com/business-wire/roff-opens-20-experience-centres-in-kerala/article9180535.ece

Pidilite board has approved 500cr buyback at rs 1000

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NOTES FROM EDELWEISS CONFERENCE - 01-FEB-18

  • Pidilite Industries (PIDI) has clocked double-digit volume growth in almost all product categories.
  • Primary focus in waterproofing business is to increase awareness amongst contractors, homeowners, retail channels, etc. Has done a significant number of advertisements featuring Mr Amitabh Bachchan.
  • The company has hiked prices 5-10% where there has been a significant increase in input costs, primarily in rubber-based products.
  • PIDI is hopeful of completing the acquisition of CP by February 2018. CP is an innovative company with niche products—floor coatings. This product is largely used in hospitals, factories, malls, etc.
  • The company has hired Accenture to look at all manufacturing related expenditure.
  • A reasonable amount of paint sales are through hardware dealers. At the company level, sale of PIDI’s products through paint dealers is limited. Inventory days at wholesaler level have improved.
  • FY18 tax rate pegged at ~32%.

Investment conclusion

  • PIDI’s presence in niche, under-penetrated and high growth categories with limited competition makes it a good play on Indian consumer goods spends. The niche presence yields high gross margins, high barriers to entry, strong brand equity, mass acceptance and superior growth opportunities. The company has near monopoly in adhesives and sealants with Fevicol and M-seal enjoying ~70% market share each in the adhesive and sealants product categories, respectively. PIDI commands a premium over competitors riding strong brand, resulting in high entry barriers. The company operates in categories where the presence of large MNCs is limited, enabling it to outpace small regional players (who lack financial strength, economies of scale and have a poor distribution network and weak brand image) with aggressive ads and product extensions.
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When will the buyback process start?

Q3 Summary of Concall (source: capital market)

  • Net sales of Consumer & Bazaar segment grew by 17.3% in Q3FY19 to Rs 1331.2 crore compared to Q3FY18 whereas PBIT of Consumer & Bazaar segment declined by 1% to Rs 360.8 crore. For 9MFY19 Net sales of Consumer & Bazaar segment grew by 17.6% to Rs 3954.2 crore compared to 9MFY18. PBIT of Consumer & Bazaar segment grew by 7% to Rs 1157 crore.

  • Sales volume & mix grew 10.8% YoY. This was driven by 13.4% YoY growth in sales volume & mix of Consumer & Bazaar products and negative 2.3% YoY growth in sales volume & mix of industrial products.

  • Net sales of Industrial Products segment grew by 5.8% in Q3FY19 to Rs 259.2 crore compared to Q3FY18. PBIT of Industrial products segment fell by 26% to Rs 30.9 crore. For 9MFY19 net sales of Industrial Products segment grew by 10.1% to Rs 766.4 crore while PBIT of Industrial products segment fell by 3% to Rs 111 crore.

  • Average VAM prices were USD1300 per tonne in Q3FY19 broadly similar to USD1325 per tonne seen in Q2FY19. Despite this, Pidilite Industries saw a 220-bps QoQ gross margin moderation to 47.2% led by sharp INR depreciation, high cost inventory on books and an up-tick in price of other raw materials. The company further mentioned that input cost pressure has now moderated, with VAM prices currently at below USD1000 per tonne level.

  • The company took another round of price hike in Q3FY19 after a 3% increase across major products in Q1/Q2. This takes the total price hike in 9MFY19 to around 5% across major product categories.

  • The company expects gross margin to recover to normal levels in Q4FY19 led by input costs moderation and price hikes.

  • Sargent Art, a division of Pidilite USA, reported decline in sales and EBITDA for the quarter and YTD mainly due to reduction in demand of products for adult colouring segment.

  • Pulvitec do Brasil sales for the quarter declined due to competitive pressure in key products.

  • The subsidiaries in Bangladesh and Thailand reported reasonable sales growth. EBITDA of subsidiaries in Thailand declined on account of higher material cost.

  • The subsidiaries in UAE reported reduction in EBITDA losses due to higher sales and control on expenses.

  • The subsidiaries in Egypt reported sales growth for the quarter and YTD. EBITDA declined despite sales growth due to higher material cost.

  • Pidilite Lanka continued to report good sales growth for the quarter and YTD. However, EBITDA declined due to higher input costs and forex losses.

  • Nina and Percept, engaged in waterproofing services has reported good sales growth. During the quarter, Nina has made a provision of Rs 4.4 crore against fixed deposits aggregating to Rs 8.8 crore, placed with IL&FS group. Excluding this provision, EBITDA growth of Nina for the quarter stands at 9.3%.

  • ICA Pidilite reported high sales growth for the quarter. EBITDA stood at Rs 1.1 crore against a loss of 0.9 crore for the same quarter last year.

  • CIPY reported sales of Rs 40.3 crore and EBITDA of 5.9 crore for the quarter.

  • The company is likely to have gained market share.

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Pidilite Industries Annual Report 2019 Notes:

  • Sixty years is a good time to pause, look back and look ahead. In the last six decades, Fevicol has grown as a brand, touched lives in so many ways, and helped build bonds with our employees, dealers, distributors, carpenters, consumers and more.

  • Tracing the journey of Fevicol gives us invaluable insights into how it became one of the most trusted and loved brands in India. These insights will continue to guide us as we travel further on this journey.

  • A single product, to now more than 10+ specific offerings, brand Fevicol has always been the champion adhesive.

  • Consolidated Net Sales grew by 16.6% On a comparable basis (after reflecting impact of GST from sale of base twelve months) consolidated Net Sales grew by 17.5% (excluding sales of Cyclo division of Pidilite USA Inc., which was sold by Pidilite USA Inc. in June 2017).

  • Branded Consumer & Bazaar Products Segment contributed 84.4% of the sales of the Company and grew by 15.6% Adhesives & Sealants category which includes adhesives (including joinery business), sealants and tapes. This category contributed 56.4% of the sales of the Company and grew by 17.3%.

  • To increase the brand engagement with millennials for Fevicol and to generate incremental business for Dr. Fixit, we made our digital initiatives deeper in FY 2018-19 through social media and performance marketing campaigns. With the objective of educating consumers about the new usages of Fevikwik and Art & Craft products, we increased the use of digital videos, in the form of pre-roll YouTube ads.

  • Fevicreate.com was launched to become a one-stop resource for all mothers and teachers searching for craft projects. The website includes projects across various academic subjects and is fully customisable by age of the child, level of difficulty and time at hand to complete the project.

  • Due to competitive pressure and market conditions, the Industrial Products segment volume grew only by 1.9%, as compared to 7.6% growth in the previous year.

  • During the year, ICA Pidilite has acquired brands and technical knowhow of certain wood finish products from the Company. Like for like sales growth after excluding these products is 26% over the last year. EBITDA was impacted by higher input cost and foreign exchange losses. Going forward, local manufacturing is expected to scale up and this should result in improvement in margins. CIPY was acquired in February 2018, hence its performance is not comparable with last year.

  • The prices of key raw materials which had increased significantly during the first half of the year under review started declining in the later part of the fiscal. Barring unforeseen circumstances this trend is likely to continue during the initial months of the current year. Continued slow down in construction industry and slow down in economic growth in recent months can impact sales growth for current year. Major subsidiaries in India are taking initiatives to improve margins and achieve consistent sales growth in their respective businesses.

  • The Company’s major international subsidiaries are in USA, Brazil, Thailand, Egypt, Dubai and Bangladesh. The Company is in the process of commissioning a second plant in Bangladesh during the year 2019. The US subsidiary plans to increase its focus on retail and e-commerce. Various initiatives are being taken to improve sales and margin in Brazil. The business environment in some of these countries remain subdued.

  • The Indian economy provides a large opportunity to the Company to market its differentiated products. Slower growth of the Indian economy and stress in sectors such as construction could impact the performance of the Company. Overseas subsidiaries by virtue of their relatively smaller size remain vulnerable to the political and economic uncertainties of their respective countries.

Get more annual report summaries on www.buysitpray.com (Twitter: @ m1hirk)

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Q1 FY 2020 Result

  • Consolidated net profit rose 22% YoY to ₹294cr in the quarter vs ₹241cr in Q1FY19.

  • Net sales rose 9.96% YoY to ₹2,017cr in Q1FY20, mainly driven by Consumer and Bazaar Products (+9% yoy rise).

  • EBITDA grew 16% to ₹444 crore in Q1 June 2019 over Q1 June 2018.

  • EBITDA margin improved 120bps to 22% from 20.8% in previous year quarter.

Commenting on the quarter performance, Bharat Puri, managing director, Pidilite Industries, said “Despite challenging demand conditions, we have delivered resilient performance driven by consumer franchise expansion in rural areas, earlier pricing actions and moderation in input costs. We remain cautiously optimistic in the medium term of delivering consistent, profitable volume led growth”.

https://www.bseindia.com/xml-data/corpfiling/AttachLive/c89e5569-ac41-4d64-bfb7-923d804f3d73.pdf

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This joint venture will provide a comprehensive array of technical mortars for wide applications ranging from flooring, wall plasters, textured wall plasters, decorative plasters and insulation.
Grupo Puma will license the technology to the joint venture company which will invest in a modern manufacturing facility in India. The entity will service the key markets of SAARC (excluding Pakistan) and Myanmar.

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