Submitted by: Ronak Gohel

Submitted to: Dr. Jeevan Nagarkar

Subject: Financial Management-2
PRN: 17020241068
Class: MBA (Div - A)
INTRODUCTION
Pidilite is a consumer centric company committed to quality and innovation.

From adhesives, sealants, waterproofing solutions and construction chemicals to arts & crafts,
industrial resins, polymers and more, our product portfolio is as diverse as it is ever-evolving.

A robust and growing network makes Pidilite products accessible across demographics and
geographies.

MILESTAONES
1959 The company started with a single factory that manufactured only one product, Fevicol.
1963 The first modern manufacturing plant was established in Kondivita Village, Mumbai.
1993 BSE welcomes Pidilite
1997 Ranked amongst the Top 15 Indian brands by FE Brandwagon Year Book 1997.
2000 M-seal, a leading brand of epoxy compounds was acquired.
2001 Pidilite launched Dr. Fixit, an extensive range of Construction Chemicals
2002 Won the Silver Lion award at Cannes Lions International Festival of Creativity 2002.
2004 Hits The Rs.1000 Crores Turnover Mark!
2004 Hits The Rs.1000 Crores Turnover Mark!
2006 Expanding The Global Footprint.
2016 Pidilite Industries received the 'Most Promising Company of the Year Award'

PEDILITE TOP BRANDS

CAPITAL STRUCTURE
As shown in Bloomberg Capital structure report, after FY2013 debt of the company is zero. So after
FY2013 no bar can be seen in below image.

Equity is increasing every year by year and debt is zero which can be seen in the balance sheet.

 Pidilite Industries (PIDI) saw above-estimate Ebitda (up 29%), on back of strong volume-led sales
growth (16% vs. 8% in 2Q). Steady improvement in consumer demand drove healthy 20% growth
in the India consumer bazaar segment and the industrial segment too saw healthy 20% sales
growth (volumes up 18%).
 Despite two quarters of double-digit volume growth and signs of steady demand improvement,
PIDI believes it is too early to call out a demand recovery, and it remains cautiously optimistic on
growth.
 PIDI increased prices for solvent and rubber-based adhesives in 3Q to pass on input cost
inflation. It shared a willingness to carry out further pricing action should input cost inflation
continue. Further, benefits from its cost-saving initiatives (Accenture hired to review
manufacturing and other costs) should aid margins, going forward
Source: Bloomberg

ANALYST’S RECOMMENDATION: HOLD/BUY

Source: Bloomberg

 As per Bloomberg’s analysts, Pidilite to report double digit volume growth in coming quarters.
Trade stabilization post GST roll-out, good monsoons aiding rural growth, huge underserved
market and strong pricing power will be the key contributors to Pidilite’s growth.
 Based on expected consolidated EPS of Rs26.7, the stock currently trades at 32.9x FY20E
earnings. Considering strong growth momentum coupled with reasonable valuations, analyst
suggest individual to BUY recommendation on the stock with a revised Target Price of Rs997,
which implies 14% upside from current levels.
 Gross margin remained flat at ~53% YoY owing to rising raw material prices. However, savings in
employee cost and other expenses (as percentage of sales) translated into EBITDA margin
expansion. Finally, despite a higher tax outgo, net profit increased ~18% YoY driven by higher
EBITDA margin and sales growth.