BusinessTeam1/28/2025
PIDI has shown 9.7% UVG in a tepid demand environment as its strategy of developing pioneer categories and entering newer segments continues to pay off. B2B continued its growth momentum driven by Industrial & Project verticals whereas B2C improved sequentially. IBD has witnessed a slowdown in sales while maintaining flat margins. Near term outlook remains cautiously optimistic on hopes of budget, real estate cycle and Govt push in budget, which can start playing out from 1Q26. PIDI is open to exploring tie ups and entry in segments like adhesives or specialty chemicals for EV/Semiconductor or electronic manufacturing, however it is long haul business. PIDI is well placed to sustain growth sustained innovations, tie-ups to bring technologically advanced products and 2-3x growth in pioneer and growth categories (45% of sales). Near term margin outlook seems fine, although margins leave little scope of expansion from current levels. We estimate 13% EPS CAGR over FY25-27 and assign DCF based target price of Rs3318 (Rs3339 earlier). Retain Accumulate
Volumes up 9.7% YoY; EBIDTA margins up 167bps; Consolidated Revenues grew by 7.6% YoY to Rs33.7bn (PLe: Rs34.58bn) Gross margins expanded 145bps YoY to 54.3%.(Ple: 53%) EBITDA grew 7.5% YoY to Rs8bn (PLe:Rs8.7bn); Margins contracted 2bps YoY to 23.7% (PLe:25.4%) PBT grew 9.5% YoY to Rs 7.5bn(PLe:Rs8.3bn) Adj. PAT grew 9.2% YoY to Rs5.6bn (PLe:Rs6.1bn) Standalone– Sales increased 9.34% to Rs30.9bn, GM improved 98bps YoY to 53.9%. EBITDA grew 5.74% to Rs7.49bn; Margins shrunk 82bps YoY to 24.2%. Adj. PAT grew 2.23% to Rs5.35bn. Consumer and Bazaar Sales grew by 19.67% YoY to Rs1.29bn; Business and Business Sales grew by 13.30% YoY to Rs1.03bn.
Concall Takeaways: 1) Like other FMCG companies, PIDI is also witnessing strain on demand across urban & rural (especially in core category) However, Rural markets continue to grow ahead of urban markets. 3Q Demand has been impacted by shorter festive season and high food inflation 2) PIDI maintains 20-24% EBITDA margin guidance 3) 3Q VAM prices have been USD884/ton (3Q24 usage USD 902/ton) 4) PIDI does not expect C&B segment to decline further 5) Headwinds on account of depreciating rupee & crude oil prices will impact PIDI in the medium term 6) PIDI is cautiously optimistic for the near term, especially with respect to construction business. Higher Capex led by government spending on rural in upcoming budget clubbed with good monsoon could lift demand 7) Real Estate cycle did witness some buoyancy; near term outlook for PIDI’s products from real estate remains strong 8) Growth & Pioneer categories constitute 45% of portfolio with room to grow by 2-3x GDP growth 9) ICA-Pidilite & Nina Percept are back to growing at healthy rates with decent profitability 10) PIDI is open to tapping opportunities in the EV & semi-conductor chemicals and adhesives segments