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.
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Wonder, does it have any listed peers in similar countries like China or BrazilâŚ
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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 basisâŚstill 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 itâs a good company currently being valued as a âgreatâ 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 doesnât 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 donât have to pay for it, and you, the buyer, wonât 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 devilâs 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 âtoo optimisticâ 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.
Letâs 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 analystâs 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 roofâŚpoint 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 companyâŚ
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 beforeâŚAround 1L Cr mcap seems like a small cap to me with the huge run way aheadâŚ
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 yearsâŚHowever, 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 wellâŚeither you were very lucky to have managed 3 times in this 5 years inspite of this stock going up 133 times in previous 20 yearsâŚor there is something else to investing in such casesâŚ
No conclusions just thoughts, Happy InvestingâŚCheers!
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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Pidilite to manufacture Jowatâs hot melt adhesives in India
The product will be manufactured in Pidiliteâs state-of-the-art manufacturing facility in Vapi, Gujarat. The adhesive will be made under the brand name of Fevicol Jowat
Source - Pidilite To Manufacture Jowat'S Hot Melt Adhesives In India
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Pidilite had slight presence in paint segment through Piditint and Unitint, and some time back they hinted about their inclination to enter Paints wholeheartedly. They have entered this segment through the launch of âHaisha Paintsâ. The name âHaishaâ was trademarked on 2021, and seems to have been derived from the slogan âDum lagake haishaâ which Pidilite had used in their famous ad for favicol.
They have launched the products in Telengana, Andhra Pradesh and Odisha markets for Interior Emulsions, Floor Coats and Wall Primers, through classic, select and premium sub-brands. The launch price is at a discount to the incumbents.
So, competition is heating up in paints space, but among the new players like Astral, Birla, Pidilite seems to have greater right to win given their presence in near adjacent segments.
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I an still trying to process if entering into Paints is a good thing, if it is, does it sounds like a competition to AP n BP,
With Grasim, Pidilite entering, have to see if Market Share of AP decreases or not
AP n Pidilite are legends when it comes to execution, so wondering what will happen when legends clash
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