Hold For Now - Pidilite Industries

Pidilite Industries (PIL) formed a part of our recommendations in Issue 26 dated December 7, 2009. The scrip, which was written about in our Choice Scrip column, was recommended at a price of Rs 197.30. Since our recommendation the scrip did move up and touched a high of Rs 240.80, thereby yielding an overall appreciation of 22 per cent.

Besides, soon after our recommendation the company also announced a bonus in the ratio of 1:1. Thus, adjusting for this, even at its CMP of Rs 114 the scrip provides an appreciation of 15.56 per cent.

In fact, the Sensex performance during the same period has clearly not been anywhere close to being impressive and is down marginally by 0.82 per cent. This clearly shows that the scrip has outperformed the Sensex by quite a mile.

Factors such as strong fundamentals, strong brand and brand recall, expanding product portfolio, inorganic and organic growth, brisk jump in profits in the first half of the last fiscal and last but not the least, low valuations were some of the reasons that made us recommend Pidilite Industries (PIL) to our readers. The company ended FY10 on a very high note with 11 per cent topline and 148 per cent bottomline growth. Pidilite Industries has also declared dividend of Rs 1.50 per share for FY10. Though the scrip is already up by 15.56 per cent, it would be wise to hold the scrip and we believe that one can think of booking profits at around Rs 128-130.