HOLD (Downgrade from ADD) 

CMP: INR 3,168 Target Price: INR 3,097 (INR 2,971)  -2% ICICI Securities Limited is the author and distributor of this report

09 August 2024 India | Equity Research | Q1FY25 results review

Pidilite Industries
Building Material

In-line quarter; outlook remains healthy

In Q1FY25, Pidilite Industries (PIDI) reported consolidated revenue growth of 3.7% YoY (5-year CAGR of 11%) driven
by 3% / 7% YoY growth in consumer & bazaar (C&B) / B2B segment. Standalone entity witnessed healthy underlying
volume growth (UVG) of 9.6% YoY with domestic C&B segment UVG of 8% YoY and B2B segment UVG of 18% YoY.
Consolidated OPM expanded 235bps YoY (+406bps QoQ) due to RM cost declining 479bps YoY (-38bps QoQ), resulting
in EBITDA / APAT growth of 15% / 21.1% YoY. Management stated demand was challenging in Q1 (impacted by
general elections and adverse weather) but it is confident of medium-term double-digit UVG aided by healthy real
estate market. It maintains margin guidance of 20-24% in the medium term. We tweak our PAT estimates; downgrade
the stock to HOLD with a rolled-over Jun’25E TP of INR 3,097.

Revenue growth of 3.7% YoY Arun Baid

PIDI reported consolidated revenue growth of 3.7% YoY (+17% QoQ; 5-year [email protected]
CAGR of 11%) as C&B segment grew 3% YoY (+22% QoQ), while B2B segment +91 22 6807 7235
grew 7% YoY (+2.5% QoQ). Overseas continuing subsidiaries reported revenue Sohil Kaura
growth of 8.6% YoY (Asia: flat YoY, Middle East and Africa: +19.9% YoY), while [email protected]
domestic subsidiaries’ revenue was largely flat YoY. Standalone revenue
increased 6.2% YoY (5-year CAGR of 12.1%) with standalone underlying
volume growth of 9.6% YoY (domestic C&B UVG of 8% YoY and B2B UVG of
18% YoY). Management stated that despite a challenging environment in Q1
(partly affected due to general elections and adverse weather), demand for its
Market Data
products was healthy. It remains optimistic of double digit UVG going ahead
Market Cap (INR) 1,611bn
due to healthy demand scenario (driven by uptick in real estate and improved Market Cap (USD) 19,193mn
construction activity). Bloomberg Code PIDI IN
Reuters Code PIDI.BO
Operating margin improves on lower RM costs 52-week Range (INR) 3,279 /2,293
Consolidated OPM expanded 235bps YoY to 23.9% (+406bps QoQ; due to Free Float (%) 30.0
operating leverage) aided by gross margin increase of 479bps YoY (+38bps ADTV-3M (mn) (USD) 15.4
QoQ) resulting in EBIDTA / APAT growth of 15% / 21.1% YoY. Overseas
subsidiaries’ EBITDA margin improved 187bps YoY (-291bps QoQ), while Price Performance (%) 3m 6m 12m
domestic subsidiaries’ margin declined 193bps YoY (-275bps QoQ). Absolute 12.5 20.8 20.8
Management indicated RM cost remains benign and has maintained Relative to Sensex 5.2 10.4 0.9
sustainable OPM guidance range of 20-24%. We have modelled OPM of 22.3-
22.7% for FY25-27E (vs FY14-FY24 average margin of ~20%).
Earnings Revisions (%) FY25E FY26E
Revenue 0.0 0.0
Financial Summary EBITDA 0.9 0.6
EPS 2.4 1.3
Y/E March (INR mn) FY24A FY25E FY26E FY27E
Net Revenue 1,23,830 1,36,625 1,52,322 1,68,021
EBITDA 27,190 30,434 34,226 38,063
EBITDA % 22.0 22.3 22.5 22.7
Net Profit 17,198 20,872 23,527 26,279
EPS (INR) 33.8 41.0 46.3 51.7
EPS % Chg YoY 33.9 21.4 12.7 11.7
Previous Reports
P/E (x) 93.7 77.2 68.5 61.3
09-05-2024: Q4FY24 results review
EV/EBITDA (x) 58.4 52.1 46.1 41.3
RoCE (%) 20.4 20.7 20.9 20.8 25-01-2024: Q3FY24 results review
RoE (%) 22.0 23.4 23.4 23.3

Please refer to important disclosures at the end of this report

Pidilite Industries | Q1FY25 results review | 09 August 2024

Valuations and view

PIDI’s operational performance in Q1FY25 was broadly in line with estimates, and with
RM prices remaining benign coupled with healthy demand prospects, we expect PIDI
to have sustained strong growth going forward. We continue to like the company for
its franchise, strong growth prospects, innovative product portfolio, brand recall,
market leadership in many categories and robust balance sheet. However, post ~13%
run-up in stock price over the past 3months, we downgrade the stock to HOLD from
Add with a rolled-over Jun’25E target price of INR 3,097 (vs INR 2,971 earlier), set at
an unchanged 65x PER Jun’25E.

Q1FY25 consolidated result review

INR mn Q1FY25 Q1FY24 YoY (%) Q4FY24 QoQ (%)
Net revenues 33,954 32,751 3.7% 29,019 17.0%
Raw Material Cost 15,685 16,697 -6.1% 13,516 16.1%
% of sales 46% 51% -479 bps 46.58% -38 bps
Employee cost 4,172 3,555 17.4% 3,736 11.7%
% of sales 12% 11% 143 bps 13% -59 bps
Other expenses 5,969 5,430 9.9% 5,998 -0.5%
% of sales 18% 17% 100 bps 21% -309 bps
Total Expenditure 25,826 25,682 0.6% 23,249 11.1%
% of sales 76% 78% -235 bps 80% -406 bps
EBITDA 8,127 7,070 15.0% 5,769 40.9%
EBITDA margin (%) 23.9% 21.6% 235 bps 19.9% 406 bps
Depreciation and amortization 844 734 15.0% 1,125 -25.0%
EBIT 7,283 6,335 15.0% 4,644 56.8%
EBIT Margin (%) 21.5% 19.3% 211 bps 16.0% 545 bps
Net Interest expenses 118 119 -0.5% 134 -11.9%
Other income 539 234 130.2% 489 10.4%
Less: Exceptional items 0 0 n.m. 717 -100.0%
PBT 7,704 6,451 19.4% 4,282 79.9%
Income taxes 1,984 1,704 16.4% 1,219 62.7%
PAT 5,721 4,746 20.5% 3,063 86.8%
Profit in associate company (8) (10) -14.7% (20) -59.3%
Less Minority interest 44 55 -21.3% 37 17.9%
Reported PAT 5,669 4,682 21.1% 3,006 88.6%
Adjusted PAT 5,669 4,682 21.1% 3,519 61.1%
Source: I-Sec research, Company data

Q1FY25 consolidated segmental result review

INR mn Q1FY25 Q1FY24 YoY (%) Q4FY24 QoQ (%)
Revenue
Consumer & Bazaar Products 27,408 26,609 3.0% 22,472 22.0%
Business to Business 7,256 6,780 7.0% 7,079 2.5%
Others 130 217 -40.2% 118 10.1%
Total 34,794 33,606 3.5% 29,669 17.3%
Less: Inter Segment revenue (840) (855) -1.7% (650) 29.2%
Net revenues 33,954 32,751 3.7% 29,019 17.0%

EBIT
Consumer & Bazaar Products 8,039 7,078 13.6% 5,448 47.6%
Business to Business 1,103 917 20.3% 835 32.1%
Others 12 4 168.2% 3 321.4%
Total 9,154 7,999 14.4% 6,286 45.6%

EBIT Margin (%)

Consumer & Bazaar Products 29.3% 26.6% 273 bps 24.2% 509 bps
Business to Business 15.2% 13.5% 168 bps 11.8% 340 bps
Total 27.0% 24.4% 254 bps 21.7% 530 bps
Source: I-Sec research, Company data

India | Equity Research 2

Pidilite Industries | Q1FY25 results review | 09 August 2024

Q1FY25 standalone result review

INR mn Q1FY25 Q1FY24 YoY (%) Q4FY24 QoQ (%)
Net revenues 31,458 29,635 6.2% 25,889 21.5%
Raw Material Cost 14,618 15,141 -3.5% 12,103 20.8%
% of sales 46% 51% -462 bps 47% -28 bps
Employee cost 3,692 3,011 22.6% 3,241 13.9%
% of sales 12% 10% 158 bps 13% -78 bps
Other expenses 5,435 4,770 13.9% 5,269 3.2%
% of sales 17% 16% 118 bps 20% -308 bps
Total Expenditure 23,746 22,922 3.6% 20,614 15.2%
% of sales 75% 77% -186 bps 80% -414 bps
EBITDA 7,713 6,713 14.9% 5,275 46.2%
EBITDA margin (%) 24.5% 22.7% 186 bps 20.4% 414 bps
Depreciation and amortization 724 615 17.7% 986 -26.6%
EBIT 6,989 6,098 14.6% 4,289 62.9%
EBIT Margin (%) 22.2% 20.6% 164 bps 16.6% 565 bps
Net Interest expenses 81 67 21.0% 78 5.0%
Other income 516 271 90.8% 420 23.0%
PBT 7,424 6,302 17.8% 4,631 60.3%
Income taxes 1,908 1,627 17.3% 1,160 64.5%
Extraordinary 0 0 n.m. (72) -100.0%
Reported PAT 5,516 4,675 18.0% 3,543 55.7%
Adjusted PAT 5,516 4,675 18.0% 3,490 58.1%
Source: I-Sec research, Company data

Q1FY25 standalone segmental result review

INR mn Q1FY25 Q1FY24 YoY (%) Q4FY24 QoQ (%) FY24
Revenue
Consumer & Bazaar Products 25,627 24,309 5.4% 20,241 26.6% 90,626
Business to Business 6,342 5,807 9.2% 6,031 5.2% 22,565
Others 130 217 -40.2% 118 10.1% 611
Total 32,099 30,333 5.8% 26,389 21.6% 1,13,802
Less: Inter Segment revenue (640) (697) -8.2% (500) 27.9% (2,132)
Net revenues 31,458 29,635 6.2% 25,889 21.5% 1,11,670

EBIT
Consumer & Bazaar Products 7,786 6,870 13.3% 5,208 49.5% 26,318
Business to Business 1,066 892 19.5% 664 60.5% 3,013
Others 12 4 168.2% 3 321.4% 33
Total 8,864 7,766 14.1% 5,875 50.9% 29,364

EBIT Margin (%)

Consumer & Bazaar Products 30.4% 28.3% 212 bps 25.7% 465 bps 29.0%
Business to Business 16.8% 15.4% 145 bps 11.0% 580 bps 13.4%
Total 28.2% 26.2% 197 bps 22.7% 548 bps 26.3%
Source: I-Sec research, Company data

India | Equity Research 3

Pidilite Industries | Q1FY25 results review | 09 August 2024

Q1FY25 subsidiary result review

INR mn Q1FY25 Q1FY24 YoY (%) Q4FY24 QoQ (%)
Overseas Subsidiaries (based on region)
Revenue
Asia 783 784 -0.1% 837 -6.5%
Middle East and Africa 728 607 19.9% 750 -2.9%
Total 1511 1391 8.6% 1587 -4.8%

EBITDA
Asia 136 128 6.3% 178 -23.6%
Middle East and Africa 78 43 81.4% 93 -16.1%
Total 214 171 25.1% 271 -21.0%

EBITDA margin (%)

Asia 17.4% 16.3% 104 bps 21.3% -390 bps
Middle East and Africa 10.7% 7.1% 363 bps 12.4% -169 bps
Total 14.2% 12.3% 187 bps 17.1% -291 bps

Domestic Subsidiaries
Revenue
C&B 1146 1121 2.2% 1148 -0.2%
B2B 844 883 -4.4% 962 -12.3%
Total 1990 2004 -0.7% 2110 -5.7%

EBITDA
C&B 154 191 -19.4% 94 63.8%
B2B 44 47 -6.4% 174 -74.7%
Total 198 238 -16.8% 268 -26.1%

EBITDA margin (%)

C&B 13.4% 17.0% -360 bps 8.2% 525 bps
B2B 5.2% 5.3% -11 bps 18.1% -1287 bps
Total 9.9% 11.9% -193 bps 12.7% -275 bps
Source: I-Sec research, Company data

India | Equity Research 4