Pidilite Industries Q1FY22 Conference Call Highlights

Financials

• Revenue from operations stood at 1937 crores displaying an upward momentum of 121% YOY from 878 crores & a downtrend of 13% QOQ. YOY growth no is higher due to lower base. Volume & Product Mix also contributed to growth
• EBITDA stood at 354 crores with an upward juncture of 312% from 86 crores YOY & a degrowth of 26% Sequentially
• EBITDA margin stood at 18%, displaying a growth of 8% YOY & a degrowth of 3% QOQ. Sequential Margins suffered due to better inventory management in Q4
• PAT showed a growth of 715% YOY from 27 crores & stood at 220 crores, displaying a degrowth of 28% QOQ.
• PAT margin also stood at 11% with a growth of 8% YOY & a degrowth of 3% sequentially. Finance Cost was higher sequentially as well taking a toll of margins.

Business Highlights

Segment Performance:

Consumer & Bazaar

• This segment contributed 75% to revenue, with sales of around 1486 crores a growth of 112% YOY & degrowth of around 14 QOQ
• Contribution to EBIT stood at 370 crores, which is 89% of total EBIT

Business to Business

• This segment contributed 24.5% to revenue, with sales of around 482 crores a growth of 156% YOY & degrowth of around 10 QOQ
• Contribution to EBIT stood at 42 crores, which is 10% of total EBIT

Subsidiaries

• Overseas subsidiaries continued its positive momentum and reported high double-digit constant currency revenue growth as well as strong earnings growth.
• Domestic subsidiaries suffered as a consequence of the lockdown in May, we have seen a sustained recovery in demand from June onwards.

Indian Subsidiaries:

• Nina Percept Pvt Ltd: Revenue:57.5 Crores , EBITDA:-7.5 Crores
• ICA Pidilite Pvt Ltd: Revenue:40 Crores, EBITDA:4.8 Crores
• Cipy Polyurethane Pvt Ltd: Revenue:25 Crores , EBITDA:2.3 Crores
• PAPL: Revenue:72 Crores , EBITDA:22.3 Crores
• Others: Revenue:7.2 Crores , EBITDA:-0.2 Crores

Subsidiaries Around the World Consolidated

• America: Revenue:51.5 Crores, EBITDA:5.3 Crores
• Middle East & Africa: Revenue:48 Crores , EBITDA:-0.6 Crores
• Asia: Revenue:68 Crores , EBITDA:13 Crores

Demand outlook:

• Sales in southern markets remain impacted due to lockdown in Q1. However, there was an uptick in demand from June 2021 across the regions post ease in lockdown restrictions
• Tier II, Tier III cities are doing well with sales growth in semi urban near pre Covid levels. Focus will be on driving volumes and increasing profitability
• Management estimates revival in real estate will be a big positive for the company
• The company’s market share remains at 65-70% in the epoxy adhesive category followed by 20-25% of Astral

Margin outlook:

• The price hike of ~4-6% covered ~70% of raw material inflation.
• Spot price of VAM(Vinyl Acetate Monomer) is hovering at US$1400-1500/tonne from average consumption cost of US$1610 in Q1FY22 (vs. US$1200 in Q4FY21, US$890 in Q1FY21). The management expects VAM prices to peak out from H2FY22 and come down to their normal level of US$800-900 /tonne
• The management reiterated margin guidance of 22-24%. Pidilite will command a brand premium of 15-20% over other brands

Capex outlook:

• The management has indicated capex of 4-6% of total revenue Capex will be focused towards improving supply chain and building a robust distribution network

Dividend

• Final dividend of Rs. 8.5 Per share approved by shareholders at the AGM held on 11 August 21