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  • 11 Aug 2022
  • ICICIdirect Research

PIDILITE REPORTS STRONG REVENUE GROWTH LED BY HIGHER DEMAND

PIDILITIND - 2901 Change: -56.90 (-1.92 %)

News: Pidilite’s consolidated revenue came in at ~Rs 3101 crore up by ~60% YoY on a favourable base and strong demand of consumer & bazar (C&B) products. Standalone revenue increased by 62% YoY to ~Rs 2778 crore led volume growth of 44%YoY. Segment wise, C&B products revenues increased by 67% YoY to  Rs 2189 crore, led by volume growth of 49%. B2B business segment revenue grew by 51% to ~ Rs 633 crore, led by volume growth of 29% YoY. The gross margin during the period declined sharply by 740 bps YoY, dragged by higher raw material prices. However, savings in employee costs and other expenses (down by ~430 bps and 220 bps YoY respectively) helped partially negate the adverse impact of higher raw material costs thereby restricting the EBITDA margin fall at 87 bps YoY to 17%. PAT up by ~64% YoY to ~Rs 358 crore, tracking strong revenue growth in Q1.

View: We believe, Pidilite has reported a strong growth in topline during Q1FY23. On a three-year basis, revenue grew at CAGR of 15% led by new product launches and strong demand across tier II and tier III cities. However, the exit gross margin of ~42% is much lower than its pre-covid level gross margin of 51% mainly due to delay in price hikes and change in product mix. That lead to decline in EBITDA margin for the company. The exit EBITDA margin of 17% is lower than its pre-covid level EBITDA margin range of 21%-22%. We await management commentary on sustainability of future demand and EBITDA margins outlook. 

Impact: Positive.