This Large Cap Adhesive Stock Pays A Dividend Of Rs 11/Share, Posts a Net Profit Of 12%

Pidilite Industries, a large-cap adhesive company has declared to pay a dividend of Rs 11 per share while posting in the March quarter performance. For Q4FY23 the company posted a consolidated profit after tax (PAT) of Rs 286 crores, up 12 per cent over the same quarter last year.

Pidilite Industries disclosed the quarterly figures and dividend details through subsequent press release statements filed on the securities exchange.

Bharat Puri, Managing Director of Pidilite Industries Ltd said, "The current quarter's revenue growth is primarily driven by domestic demand. Gross margin improved during the quarter enabled by the easing of input prices. This enabled us to reinvest in our brands as well as a route to market."

Consolidated results

As per the press release, the net sales for the year were Rs 11,752 crores and grew by 19 per cent over last year. The net sales for the current quarter at Rs 2,674 crores were higher by 7 per cent over the same quarter last year.

The revenue growth was driven by strong volume growth, improved mix, and price increases. Growth was broad-based across Consumer and Bazaar (C&B') and Business to Business (1326') segments with Domestic C&B reporting growth over 20 per cent.

Domestic C&B business revenues grew by 10 per cent underpinned by strong volume growth of 7 per cent. B2B businesses faced headwinds due to lower exports and lower demand from businesses dependent on exports. The demand from rural and semi-urban improved during the quarter, as per the statement.

The company reported a 7 per cent growth in EBITDA to Rs 1,984 Cr over last year. While for the quarter, the EBITDA stood at Rs 459 crores. The PAT for the year at Rs 1,289 Cr was up by 7 per cent over last year.

The moderation in input costs led to an improvement in gross margin, both sequentially and over the previous year. Part of the benefits of margin improvement was invested in market-facing initiatives for channel and consumer. Consolidated EBITDA grew by 14 per cent and the EBITDA margin was 17 per cent against 16 per cent in the same period last year.

Standalone results

The company witnessed a growth of 19 per cent in net sales for the year, it was reported to be Rs 10,545 crores over last year while for the current quarter, it stood at Rs 2,366 crores, higher by 7 per cent over the same quarter last year.

EBITDA for the year, was at Rs 1,855 crores, grew by 5 per cent over last year, and for the current quarter ended in March stood at Rs 436 crores, up by 12 per cent over the same quarter last year. PAT for the year at Rs 1,257 crores was up by 6 per cent over last year. PAT for the current quarter at Rs 291 crores up by 15 per cent over the same quarter last year.

Guidance

In its press release, Pidilite said, that amidst uncertain global economic conditions and inflationary pressures, international subsidiaries also reported moderate sales growth along with improvement in EBITDA. On the domestic front, C&B subsidiaries continue to deliver industry-leading profit and growth.

Puri stated that the near-term environment is likely to remain uncertain, and we look forward to the future with cautious optimism. "The moderation in input costs, easing of inflation, and the growth in infrastructure and construction should enable us to deliver volume lead profitable growth. We remain committed to delivering broad-based consistent volume growth while continuing to invest in our brands, building capabilities across the digital landscape as well as building a resilient and future-ready supply chain."

Dividend Details

Further, the company notified that the board of directors recommended a dividend of Rs 11 per equity share of Re 1 each for the financial year ending 31st March 2023. The dividend announced is yet to get the approval of the shareholders at the annual general meeting (AGM). The company did not mention any record date or book closure details yet.

Share price movement

The current market price of the Pidlite Industries Limited stock is Rs 2448.35 per share, which fell marginally by 0.12 per cent. Its 52-week high is at Rs 2916.85 per share while the 52-week low is at Rs 1988.60 per share. Over a year the share price has rallied by 11.11 per cent while in three years it has surged by 81.05 per cent.

Amnish Aggarwal, the Head of Research, Prabhudas Lilladher Pvt Ltd suggests 'hold'

According to the analyst Pidilite Industries Limited's gross margins bounced back sharply with a fall in VAM prices which enabled higher ad spending behind brands. VAM prices have dropped sharply starting from 2Q23 and spot VAM prices trade at USD 930/MT, declined by 62 per cent from its peak. "We expect margins to bounce back from 1Q24 and currently factor in FY23-25 EPS CAGR of 37 per cent. We have a Hold rating on the stock with a target price of Rs 2500." The stock currently trades at 49.4x FY25 EPS."

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