Pidilite Industries Net Sales Up 15% In April - December FY14

Pidilite Industries (PIL), yesterday (January 28, 2014) announced its October-December FY14 result after market hours. The company showed good performance during the nine month period (April 2013 – December 2013). Consolidated net sales and net profit grew by 16% and 10% respectively on yearly basis. For Q3FY14, the net sales showed a growth of 14.7%, whereas PIL's performance has been affected on bottomline front. Bottomline de-grew by about 18% to Rs 96 crore in the quarter under consideration, majorly due to higher input costs and increase in exceptional item, which has increased to Rs 6 crore.

PIL's consolidated topline for 9MFY14 stands at Rs 3292.6 crore as compared to Rs 2839 crore in 9MFY13. Its major revenue driver, consumer and Bazaar products, which contributes over 80% revenue, increased by 16% on YoY basis to Rs 2733.78 crore. Its other segment, industrial products, reached to Rs 596 crore by showing a growth of 14.5% over 9MFY14.

As far as operating expenses are concerned, it has increased by 15% to Rs 2714.9 crore in 9MFY14. However, the total expenses have remained neutral as a proportion of revenue at 82.5%. For the December quarter in FY14, the expenses have increased gradually on yearly basis due to the higher input cost and higher expenses on advertising.

EBITDA for 9MFY14 boosted to Rs 577.7 crore against Rs 481.8 crore during the same period a year ago and for Q3FY14, it stood at Rs 159 crore. However, the EBITDA and net margin remained under pressure for both December quarter and 9M period in FY14. For Q3FY14, the EBITDA and net margin declined by 1.14% and 3.61% to 14.89% and 9% respectively, due to appreciation in rupee that led to higher input cost. 

The growth in sales for December quarter in FY14 is mainly led by 11% volume growth on yearly basis. The company has not increased its product prices in the past quarter and also has no plans to increase its product prices in the forthcoming quarter in current financial year. However, to sustain the sales growth in the coming period, the company needs to maintain the volume growth at a level higher than the December quarter in FY14.

The stock price closed 1.5% up at Rs 284.85 in today’s (January 29, 2013) trading session. 

Key Takeaways from Q3FY14 Concall :

As said by the management, during December quarter in FY14, the sales of art & stationery products like Fevikwik, Fevistik and Fabric products has grown significantly in domestic market. 

PIL’s export market has performed well during the quarter. Further, in its export market, the sales from North America business, especially the car care business has grown by about 4%. In addition the, South America business has also shown a considerable growth in sales. However, the company accepted, that the sales in the Bangladesh region has got impacted to some extent due to political issues over there.

PIL also mentioned, that during Q3FY14, there were no major changes in the product mix.  Further, they were looking forward to various investments in the quarters coming ahead along with the focus on existing product mix, which will led the growth in future for PIL. So, we recommend investors to remain invested in the counter for long term horizon.