PIDILITE INDUSTRIES
Reco price/date: Rs 170/May 28
Current/target price: Rs 164/ Rs 186
Pidilite Industries Ltd reported better-than-expected results for the March quarter. Adjusted net profit grew 42 per cent to Rs 75 crore on sales of Rs 690 crore. According to the company, a 4.4 times increase in other income and 270 basis points decline in tax rate boosted net profit growth. Continued robust growth in the consumer and bazaar segment, despite price rise in Fevicol, indicates strong consumer demand. Pidilite benefited from declining prices of vinyl acetate monomer (VAM) in Q4, resulting in a gross margin expansion of 350 basis points sequentially. Analysts remain cautious, as rupee depreciation can negate the impact of declining VAM prices on margins. Maintain Buy.
MOSL
VOLTAS
Reco price/date: Rs 107/May 29
Current/target price: Rs 102/Rs 120
Voltas Ltd reported strong results for the March quarter, in line with analysts’ estimates. Key surprises were expansion in margin and drop in tax rate. Revenue dipped six per cent to Rs 1,570 crore, mainly due to sharp drop in the engineering and procurement services (EPS) segment. Decline in earnings before interest, taxes, depreciation and amortisation (Ebitda) was arrested to three per cent as margins improved 30 basis points to 8.7 per cent. Net profit grew six per cent to Rs 100 crore during the quarter. Order intake dipped 63 per cent to Rs 420 crore, while backlog (at Rs 4,290 crore) declined 12 per cent, led by 20 per cent dip in international orders. Domestic orders were flat during the quarter. Edelweiss has raised its earnings estimate for FY13 and FY14 by three per cent and six per cent, respectively, on the back of increased margin estimate. Maintain hold.
Edelweiss Securities