12 Annual Global Investor Conference
BSE Sensex
28,532
S&P CNX
8,810
th
Pidilite Industries
TP: INR850 (+22%)
Mr. Bharat Puri
Managing Director
Pidilite Industries
Company update | Sector: Consumer
CMP: INR696
Buy
CEO TRACK
Stock Info
Bloomberg
Equity Shares (m)
52-Week Range (INR)
1,6,12 Rel. Perf. (%)
M.Cap. (INR b)
M.Cap. (USD b)
12M Avg Val (INR M)
Free float (%)
PIDI IN
512.7
770/521
-8/1/13
356.8
5.4
370
30.4
Pioneering through insights and innovation
Takeaways from CEO track
We hosted Mr. Bharat Puri, MD of Pidilite as part of CEO track at our conference.
Here are the key takeaways from his presentation.
Emphasis on Pidlilte’s key strength of category creation:
According to Mr. Puri,
Pidilite’s key strength historically has been its ability to create categories apart
from expanding them. The reasons which have driven this are:
Insights to the needs of consumers as a result of close association for
generations
Innovation ability to fulfill the need
Investments abetting the insights and innovation
Perseverance and patience to keep going until success is achieved.
Most companies lack one or more of these four attributes. Mr. Puri cited
various examples of the success achieved in the two largest brands, Fevicol and
M-Seal. Fevicol as a white glue was a revolutionary new category when it was
launched and M-Seal, the waterproofing product was acquired from the
Mahindras who were unable to gain any traction. After acquisition and due to
perseverance, Pidilite has been able to ramp up M-Seal massively in terms of
scale.
Expanding the categories that they have created:
‘Every carpenter wants to be
a contractor and every contractor wants to be an interior designer’.
Pidilite
aims to aid them in achieving their dream. Innovation is not just on the
category and initial products but also on the revolutionary nature of
communication (iconic Pidlite and M-Seal advertisements) and relationship with
craftsmen (Fevicol Furniture books, Fevicol Design ideas, training of carpenters
to use the products better as well as introducing newer and better product
variants). Mr. Puri’s experience as former head of Cadbury’s in India when his
team positioned Chocolates as a gifting product similar to Indian sweets through
‘Cadbury Celebrations’ packs will aid the company on its emphasis on both
category creation and category expansion. In every category that Pidilite is
present, management credo is to focus on expansion by continue doing what
they are doing right and keep doing it on a consistent basis.
Financial Snapshot (INR b)
Y/E Mar
2016 2017E 2018E
Sales
53.7
60.7
73.8
EBITDA
11.8
14.0
16.5
PAT
7.6
9.4
11.1
EPS (INR)
14.8
18.3
21.6
EPS Gr. (%)
46.6
23.0
18.2
BV/Sh.(INR)
53.4
68.0
82.9
RoE (%)
30.4
30.1
28.6
RoCE (%)
29.1
28.7
27.6
Payout (%)
28.3
26.6
26.4
Valuations
P/E (x)
46.9
38.1
32.3
P/BV (x)
13.0
10.2
8.4
EV/EBITDA (x)
29.6
24.6
20.7
Div. Yield (%)
0.6
0.7
0.8
Relative to Index
Krishnan Sambamoorthy
(Krishnan.Sambamoorthy@MotilalOswal.com); +91 22 6129 1545
Gautam Duggad
(Gautam.Duggad@MotilalOswal.com); +9122 61291522 /
Vishal Punmiya
(Vishal.Punmiya@motilaloswal.com); +9122 39804261
Motilal Oswal research is available on www.motilaloswal.com/Institutional-Equities, Bloomberg, Thomson Reuters, Factset and S&P Capital.
Investors are advised to refer through important disclosures made at the last page of the Research Report.
1
September 2016