Pidilite Industries hits fresh high ahead of board meet; up 26% in 3 months

The company has fixed March 16, 2020, as the record date to determine /ascertain the members entitled to receive the interim dividend.

Shares of Pidilite Industries hit a record high of Rs 1,645, up 4 per cent, on the BSE on Thursday ahead of its scheduled board meeting today to consider interim dividend for the financial year 2019-2020. The stock surpassed its previous high of Rs 1,609 touched on February 14, 2020.

The company has fixed March 16, 2020 as the record date to determine /ascertain the members entitled to the receive interim dividend. The stock will turn ex-dividend on March 13, BSE data shows.

One of the leading manufacturers of adhesives, sealants, construction chemicals, consumer adhesive, and specialty chemicals, Pidilite outperformed the market during the past three months by surging 26 per cent, as against a 5 per cent decline in the S&P BSE Sensex.

Last month, Pidilite Industries had entered into a definitive agreement with Tenax SPA (Tenax Italy) for acquiring 70 per cent of the share capital of Tenax India Stone Products (Tenax India) for cash consideration of approximately Rs 80 crore (depending upon actual working capital and cash at the time of closing). Tenax Italy is the leading manufacturer of adhesives, coating, surface treatment chemicals and abrasives for the marble, granite and stone Industry.

In the post October-December quarter (Q3FY20) results call in January, Pidilite noted that sustained challenging market conditions was hit due to muted consumption demand and real estate construction activity. While the company is hopeful of staging a recovery in FY21, uncertain market conditions weigh on near-term growth outlook in the domestic consumer business.

The management reiterated the future volume growth in the consumer and bazaar (C&B) segment would largely be driven by improving focus in rural markets as well as recovery in liquidity condition.

"Pidilite is a high-quality company, in our view, with a monopolistic market share in its business. The company’s strategic initiatives position it well to benefit from an improving demand environment and GST-led formalization. Volatile raw material costs pose risks to margins, but we are not overly concerned, given the company’s pricing power and the potential for cost controls/operating leverage ahead," analysts at JP Morgan said in a report. The brokerage firm has ‘neutral’ rating on the stock.

Analysts at ICICI Securities, meawhile, remain structurally positive on Pidilite given its strong brand and balance sheet condition. It, however, says that the tepid volume growth in the medium-term would weigh on valuations.