Pidilite joins Rs 500 billion market-cap league; stock hits new high

In past one month, Pidilite Industries has outperformed the market by surging 12% as compared to 1% rise in the S&P BSE Sensex

Pidilite Industries has entered into the league of corporate entities with a market value of over Rs 500 billion after the stock price of the company hit new high on the BSE.

Pidilite Industries with the m-cap of Rs 500.73 billion stood at number 62nd position in overall m-cap ranking at 10:28 am, the BSE data shows. The stock was trading 1% higher at Rs 977 hit a new high of Rs 982 on the BSE in intra-day deal.

Pidilite is a dominant play in India’s adhesive market with a market share of around 70% in its leading brand categories (Fevicol) in the organized segment.

In past one month, Pidilite Industries has outperformed the market by surging 12% after the company has entered into collaboration with Jowat SE, a German family-owned enterprise and one of the leading suppliers of industrial adhesives worldwide. On comparison, the S&P BSE Sensex was up 1% during the same period.

As part of the collaboration, Pidilite will exclusively handle sales and distribution of the entire range of Jowat adhesives in India and other neighbouring countries including Sri Lanka, Bangladesh, and Nepal.

Analysts at ICICI Securities believe higher disposable income (due to Seventh Pay Commission) & implementation Goods and Services Tax (GST) would help boost the volume of adhesives segments in terms of higher expenditure towards house décor and reduction of tax arbitrage for the unorganised segment.

Analyst at Karvy Stock Broking has ‘hold’ rating on the stock with 12 month target price of Rs 1,005.

We continue to maintain our positive outlook on the company with leadership position in the industry. The company has been expanding its market presence organically and inorganically. Besides, the company enjoys sound financials, the brokerage firm said in company update.

“We expect consumer goods companies to see revival on both fronts, on volume growth and margin expansion from here on. With few state elections, expected populist budget, rural consumption should benefit. This coupled with improving macros and hopefully a good monsoon should also augur well,” analysts at Edelweiss Securities said in March quarter results preview on consumer goods sector.

Pidilite saw a healthy volume offtakes in Q3FY18. We expect the upwards volume trajectory to continue even in Q4FY18 quarter aided by improvement in demand scenario. Thus, we expect Pidilite to report around 10-11% YoY volume growth on a base of 7.8% growth in domestic business (Q3FY18 saw 23% YoY volume growth on a base of negative 0.7%). We expect international business to post 7% revenue growth post US recovery. VAM prices have continued to remain elevated which will lead to some pressure on margins. Some cost rationalization initiatives will however give comfort to EBITDA margins, it added.