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ICICI Direct: Pidilite Industries Reports Muted Quarter; Non-Metro Regions Drive The Recovery   

ICICI Direct: Pidilite Industries Reports Muted Quarter; Non-Metro Regions Drive The Recovery

Range of Fevicol brand products manufactured by Pidilite Industries (image courtesy Company Website)
Range of Fevicol brand products manufactured by Pidilite Industries (image courtesy Company Website)

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ICICI Direct Report

Pidilite Industries Ltd.’s Q1 FY21 performance was muted. However, this was perceived to be on account of nationwide lockdown.

The positive takeaway from the conference call is: 1) month on month improvement in demand, 2) emerging India (semi urban, rural regions) recorded double digit revenue growth in May-June 2020, 3) plants are operating at capacity utilisation of 75-80%, 4) raw material prices remained benign (average consumption cost 15% lower versus Q1 FY20), 5) expectation of demand recovery in urban regions (contributes approximately 65-70% in total sales) post easing of lockdown restrictions.

On the margin front, gross margin expansion of approximately 210 basis points YoY was mainly due to benign raw material prices but higher fixed cost dragged Ebitda margin to 7.6% in Q1 FY21. Finally, profit after tax fell approximately 95% YoY, tracking lower sales and operating profit in Q1 FY21.

We believe opening up of 90% plus retail outlets coupled with unlocking of metro regions would help in faster recovery in volume growth, going forward. We believe Pidilite with a strong brand patronage coupled with pan-India distribution network is likely to recover fast with a recovery in economic activities.

Click on the attachment to read the full report:

ICICI Direct Pidilite Industries Q1FY21 Result Update.pdf

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