rating matrix pidilite industries...

January 30, 2015

ICICI Securities Ltd | Retail Equity Research

Result Update

All-round performance…beats our estimates • Net sales increased ~13% YoY in Q3FY15, led by an 8% YoY rise in

volume. Revenues from the consumer & bazaar (C&B) and industrial segment recorded growth of 13% and ~5% YoY, respectively

• In spite of a decline in gross margin by 90 bps YoY due to use of higher cost inventory, the EBITDA margin improved 120 bps YoY led by saving purchase of traded goods and lower advertisement cost. We believe the full benefit of benign raw material prices would flow in Q4FY15E. Higher EBITDA margin coupled with lower tax outgo helped PAT to grow 28% YoY during Q3FY15

• Sales from subsidiaries in constant currency grew 10% YoY in Q3FY15. Sales from the Brazilian subsidiary declined 3% YoY due to weaker currency and higher inflation in the region

Market leader in adhesive segment Pidilite Industries (Pidilite) is a dominant play in India’s growing adhesive and industrial chemical market with a market share of ~70% in its leading brand categories in the organised segment. The company’s two major segments, consumer & bazaar (C&B) and speciality industrial chemical have grown at a CAGR of ~20% and ~15% (standalone), respectively, in FY10-14. The consumer & bazaar segment contributes ~79% of Pidilite’s standalone revenue. This segment has grown mainly driven by the adhesive and sealants segments that contributed ~50% to the company’s consumer & bazaar segment revenue (FY14). We believe since the segment growth is largely driven by construction, repair and maintenance, sales growth (standalone) in consumer and bazaar will be at 21% CAGR in FY14-17E on the back of an increase in penetration in smaller towns (population below 50,000). Revival in industrial activity to drive industrial chemical demand Specialty industrial segment contributes ~21% of standalone revenue. This segment grew at 20% CAGR in FY10-14 mainly driven by growth in demand from packaging, cigarettes, stickers, labelling, footwear, etc. The specialty industrial segment has three major sub-segments: industrial adhesive, industrial resins and organic pigments & preparations. We have modelled industrial segment revenues to grow at ~26% CAGR in FY14-17E led by strong growth in industrial adhesives & resins. Strong brand: More of consumer pull model Pidilite Industries is one of the well known adhesive companies in India for the quality and reach to end users. Fevicol, the legacy brand of the company, is a generic name in the adhesive category in India. In spite of the strong brand, the company has kept its marketing & selling expenses at ~4% of sales to gain market share. Fairly valued; recent rally captures near term positives We believe that while the Indian economy is on a revival mode, Pidilite, being a strong brand in the adhesive segment, is well positioned to capitalise on the growth momentum. We believe efficient deployment of cash for inorganic growth would be an added advantage. We estimate revenues and earnings CAGR of ~20% and ~22%, respectively, in FY14-17E supported by demand from tier II, tier III cities. We believe a recovery in margin coupled with strong return ratios would justify the company’s current valuation. At the CMP, the stock is trading at 33x FY16E and 27x FY17E earnings. We believe the recent rally in the stock captures near term positives. Thus we change our recommendation from BUY to HOLD with a revised target price to | 560/share (valuing at 35x FY17E).

Pidilite Industries (PIDIND) | 571

Rating matrix Rating : HoldTarget : | 560Target Period : 12 monthsPotential Upside : -2%

What’s changed?

Target Changed from | 462 to | 560EPS FY15E Changed from | 10.1 to | 10.4EPS FY16E Changed from | 12.2 to | 12.9EPS FY17E Changed from | 15.1 to | 16Rating Changed from Buy to Hold

Quarterly performance

Q3FY15 Q3FY14 YoY (%) Q2FY15 QoQ (%)Revenue 1,202.2 1,068.8 12.5 1,254.6 -4.2EBITDA 193.4 159.2 21.5 206.3 -6.2EBITDA (%) 16.1 14.9 120bps 16.4 -35bpsPAT 124.4 97.2 27.9 138.9 -10.5

Key financials

| Crore FY14 FY15E FY16E FY17ENet Sales 4,261 5,034 6,009 7,159 EBITDA 677.1 798.9 969.6 1,171.5 Net Profit 449.7 511.2 621.5 765.5 EPS (|) 8.9 10.1 12.2 15.1

Valuation summary

FY14 FY15E FY16E FY17EP/E 64.2 54.5 44.0 35.6 Target P/E 63.2 53.6 43.3 35.1 EV / EBITDA 42.5 34.8 28.7 23.4 P/BV 14.8 13.4 11.9 10.3 RoNW (%) 23.0 24.6 27.1 29.0 RoCE (%) 29.8 32.4 34.9 37.7

Stock data Particular AmountMarket Capitalization (| Crore) 28,885.3Total Debt (FY14) (| Crore) 45.9Cash and Investments (FY14) (| Crore) 177.3EV (| Crore) 28,753.952 week H/L 607 / 270Equity capital (| Crore) 51.3Face value (|) 1.0MF Holding (%) 3.5FII Holding (%) 15.9

Price performance

1M 3M 6M 12MPidilite Industries 10.7 39.7 58.4 102.7 Asian Paints 16.3 36.4 38.9 82.5 Kansai Nerolac 24.9 28.6 57.2 131.1

Research Analyst

Sanjay Manyal [email protected]

Hitesh Taunk [email protected]


Variance analysis Q3FY15 Q3FY15E Q3FY14 YoY (%) Q2FY15 QoQ (%) Comments

Revenue 1202.2 1196.0 1068.8 12.5 1254.6 -4.2Revenues increased ~13% mainly on the back of 8% YoY volume growth and ~4.5% additional price hike

Other Income 6.1 12.5 7.1 -13.3 15.1 -59.3

Raw Material Exp 715.4 616.0 521.9 37.1 642.3 11.4Sharp increase in raw material cost attributable to use of higher cost

inventoryEmployee Exp 127.6 122.0 107.4 18.8 128.0 -0.4

Admin & Other exp 210.4 225.9 216.0 -2.6 219.1 -4.0Other expneses declined ~270 bps YoY mainly due to lower advertisement expenses

Purchase of Traded goods -15.2 51.2 50.6 -129.9 53.8 -128.2

Total Expenditure 1008.8 1015.1 909.6 10.9 1048.4 -3.8

EBITDA 193.4 180.9 159.2 21.5 206.3 -6.2

EBITDA Margin (%) 16.1 15.1 14.9 120 bps 16.4 -35 bpsIncrease in EBITDA margins was on account saving in purchase of traded goods coupled with lower advertisement expenses. However, the saving was partly offset by a higher raw material cost

Depreciation 30.7 32.8 21.3 44.4 31.3 -2.0Higher depreciation due to adoption of the Company Act 2013. This resulted

in an increase in depreciation charges in the quarterInterest 5.6 2.7 5.7 -1.2 2.7 106.6 Lower interest outgo was due to repayment of debtExceptional items 1.4 0.0 9.7 0.0PBT 161.8 157.9 129.6 24.9 187.3 -13.6Total Tax 37.7 42.6 33.4 13.0 50.0 -24.7 Tax rate declined ~240 bps YoY

PAT 124.4 116.9 97.2 27.9 138.9 -10.5Sharp growth in PAT attributable to higher EBITDA margin, absence of any exceptional losses aided by lower tax outgo during the period.

Key MetricsConsumer & Bazaar 1,000.9 998.0 886.1 13.0 1,032.6 -3.1 Consumer bazaar segment has seen strong 13% growth led by 8% YoY

volume growth & additional price increase in leading productsIndustrial 203.9 211.2 193.9 5.2 232.7 -12.4 Industrial segment growth largely led by volume growth; however, the

company has taken a price cut on certain products to pass on the benefit to customers

Others 12.3 7.3 6.9 79.7 11.9 3.5

Source: Company, ICICIdirect.com Research Change in estimates

Comments

Old New % Change Old New % ChangeRevenue 6,039.3 6188.0 2.5 7,195.3 7468.9 3.8 We have marginally tweaked our revenue estimate for FY16E & FY17E EBITDA 969.6 1004.2 3.6 1,171.5 1225.5 4.6

EBITDA Margin % 16.1 16.2 13bps 16.3 16.4 11bps We expect EBITDA margin for FY16E & FY17E to improve further considering benign raw material prices. This would largely be on account of a decline in crude prices, including VAM (contributes ~15-20% in total raw material cost)

PAT 621.5 657.0 5.7 765.5 811.0 5.9 We have revised PAT estimate upwards by 5-6% YoY for FY16E & FY17E due to higher margin

EPS (|) 12.3 12.9 5.7 15.1 16.0 5.9

FY16E

(| Crore)

FY17E

Source: Company, ICICIdirect.com Research Assumptions

CommentsFY14 FY15 FY16E FY17E FY16E FY17E

Consumer & Bazaar (%) 16.3 19.8 20.8 20.7 19.3 19.1

We believe consumer & bazaar segment and industrial segment will record ~20% and 25% sales CAGR in FY14-17E, respectively, driven by easing in concern on economic recovery coupled with improving consumer sentiments

Industrial Growth (%) 0.7 35.7 21.5 20.9 19.7 19.4 Others Growth (%) 71.2 21.9 8.0 20.9 19.7 19.0

EarlierCurrent

Source: Company, ICICIdirect.com Research


Company Analysis Market leader in adhesive segment

Pidilite Industries (Pidilite) is a dominant play in India’s growing adhesive and industrial chemical market with a market share of ~70% in its leading brand categories in the organised segment. The company’s two major segments, consumer & bazaar (C&B) and speciality industrial chemical have grown at a CAGR of ~18% and ~15% (standalone), respectively, in FY09-14. The consumer & bazaar segment contributes ~79% of Pidilite’s standalone revenue. This segment has grown mainly driven by the adhesive and sealants segments, which contributed ~50% to the company’s consumer & bazaar segment revenue (FY14). Among other sub-segments, construction & paint chemicals and art material contributes ~19% and ~12%, respectively, to the topline. Consumer & bazaar segment sales growth is largely driven by the company’s pricing power in the branded product category (Fevicol, M-Seal, Dr Fixit), which resulted in margin expansion. We believe since the segment growth is largely driven by construction, repair and maintenance works (Fevicol, M-seal, Dr Fixit are promoted in such a way), sales growth in the consumer and bazaar will take place at ~21% CAGR in FY14-17E on the back of an increase in penetration in smaller towns (population below 50,000).

Exhibit 1: C&B segment revenue contribution

Art Materials & Others10%

Construction /Paint

Chemicals25%

Adhesive & Sealants

65%


Exhibit 2: Standalone C&B segment may see ~21% revenue CAGR in FY14-17E

14821813

22272674

31093726

4517

5462

0

1000

2000

3000

4000

5000

6000FY

10

FY11

FY12

FY13

FY14

FY15

E

FY16

E

FY17

E

(| c

rore

)

20.4% CAGR

~21% CAGR


Revival in industrial activities to drive speciality chemical demand

The specialty industrial segment contributes ~21% of Pidilite’s standalone revenue. This segment has grown at ~20% CAGR during FY10-14 mainly driven by growth in demand from packaging, cigarettes, stickers, labelling, footwear, etc. The specialty industrial segment has major three sub-segments: industrial adhesive, industrial resins and organic pigments & preparations. The company’s specialty industrial chemical export revenue (contributes ~8% to topline) recorded ~21% CAGR over the last five years. This segment caters to various industries (for example, textiles, leather, footwear, ink, packaging, etc). We have modelled industrial segment revenues will grow at a CAGR of ~26% for FY14-17E led by strong growth in industrial adhesives & resins.

During Q3FY15, the C&B segment recorded revenue

growth of ~13% YoY largely driven by ~8% YoY growth in

volume

During Q3FY15, the industrial segment recorded a revenue

growth ~5%, largely due to a growth in volume (~8%

YoY). However, the company has taken a price cut on

some of the industrial products to pass on the benefit to

customers. The demand for industrial products remained

subdued during the quarter. However, we believe the

segment would record revenue CAGR of 26% in FY14-17E

on account of a pick-up in industrial activity


Exhibit 3: Export revenues records ~21% CAGR in FY10-14

050

100150200250300350400450

FY10 FY11 FY12 FY13 FY14

(| c

rore

)


Exhibit 4: Growth in revenue of specialty industrial chemicals segment

467.

0

580.

9

635.

5

708.

2

713.

2 967.

9

1176

.2 1422

.2

0200400600800

1000120014001600

FY10

FY11

FY12

FY13

E

FY14

FY15

E

FY16

E

FY17

E

(| c

rore

)

CAGR 20%

CAGR 26%


Strong brand: More of consumer pull model Pidilite Industries is one of the well-known adhesive companies in India for the quality and reach to end-users. Fevicol, the legacy brand of the company, is a generic name in the adhesive category in India. Currently, the flagship brands of the company like Fevicol and M-Seal have a market share of ~70% each in the domestic market. Pidilite’s relentless focus on building a strong consumer brand through various ad campaigns differentiates it from its peers. This has helped the company to extend its presence into more consumer centric segments such as automotive and art materials to build a strong relationship with the end user. The company has introduced a direct marketing strategy to reach and educate carpenters about the use of a quality product in their work. Alongside, Pidilite’s simple and creative TV ad campaigns (like “Fevicol ka mazboot jod hai tutega nahi”) attracted many viewers and, thus, reached the masses. In spite of the strong brand, the company has kept its marketing and selling expenses at ~5% of sales to gain market share.

Exhibit 5: Keeps marketing & selling expenses at ~4-5% of sales

4.5

3.3 3.64.4 4.7

9.5

8.1 8.2 8.6 8.49

8

3.2

4.73.6

3.94.2

4.0 3.53.9

3.9

0123456789

10

FY08 FY09 FY10 FY11 FY12 FY13 FY14

(%)

Pidilite Industries Asian Paints Kansai Nerlac


Pidilite has consistently invested in brand building through

advertising campaigns (~5% of sales over the last three

years)


Domestic business to drive consolidated topline On a consolidated basis, we have modelled revenue and earnings CAGR of ~20% for FY14-17E. We expect the domestic business to continue to witness strong volumes growth supported by sustained demand from tier II & tier III cities and its foreign subsidiaries to break even by FY16E. Standalone revenue and earnings are expected to grow at a CAGR of 20.4% and 21.7%, respectively. This can be largely attributed to the C&B and industrial division, which is expected to grow at a CAGR of ~21% in FY14-17E. We have tweaked our earning estimates mainly due to a decline in other income and higher depreciation charges for FY15E and FY16E. Exhibit 6: Revenue growth driven by introduction of new products

2194

.1

2643

.9

3109

.7

3657

.9

4260

.6 5095

.5

7431

.1

6156

.7

0

1000

2000

3000

4000

5000

6000

7000

8000

FY10 FY11 FY12 FY13 FY14 FY15E FY16E FY17E

(| c

rore

)

CAGR 18%

CAGR 20%


Price hike at regular interval to help contain drop in margin During FY14, the EBITDA margin dipped ~50 bps YoY largely on account of ~40% increase in VAM prices in H2F14. At the same time, the lag impact of rupee depreciation was also an overhang. VAM prices (accounting for ~15% of total raw material cost) declined from US$1500/tonne to US$1350/tonne. We believe the full benefit of benign raw material prices would flow in the coming quarters (From Q4FY15E onwards). We have modelled the consolidated EBITDA margin will improve from 15.8% in FY14 to 16.4% in FY17E.

Exhibit 7: EBITDA margin to inch up, going forward

398.

7

468.

7

483.

7 600.

5

677.

0 828.

9

1,00

4.2 1,22

5.5

0

200

400

600

800

1000

1200

1400


(| c

rore

)

14151516161717181819

(%)

EBITDA EBITDA Margin


The EBITDA margin increased ~120 bps YoY largely on

account saving in purchase of traded goods and lower

advertisement expenses during Q3FY15. In addition, the

company has guided that VAM prices are stabilising with

the decline crude prices. We believe the EBITDA margin

will improve, going forward, with stabilising VAM prices


Net profit likely to grow at ~22% CAGR in FY14-17E With the improvement in EBITDA margin and low interest outgo (due to redemption of outstanding FCCB of US$20.5 million) of the standalone business, we believe the consolidated net profit will grow at a CAGR of ~22% in FY14-17E. Exhibit 8: Growth in EBITDA margin to aid PAT growth

309.

3 424.

0

449.

8 529.

9

277.

0 324.

3

657.

0

811.

0

0

100

200

300

400

500

600

700

800

900


(| c

rore

) CAGR ~13%

CAGR 22%


We believe the bottomline of the company will grow at

~22% CAGR in FY14-17E


Outlook and valuation We believe the company has witnessed sustainable revenue and earnings growth at a CAGR of 16.5% and 32.1%, respectively, in FY09-14 on the back of product demand from the field of art and craft along with interior decoration trends in domestic households. We believe the margin will improve, going forward, supported by benign raw material prices with a favourable currency movement. The company’s ability to pass on the rise in input cost would help margins to remain intact for FY14-17E. Further, Pidilite’s recent redemption of outstanding FCCB (US$20.5 million) would translate into interest cost saving, which will help drive its bottomline. We expect revenues and earnings to grow at a CAGR of ~20% and ~22% in FY14-17E respectively. In addition, cash deployment in inorganic growth would further aid margin growth. At the CMP, the stock is trading at 44x FY16E and 36x FY17E earnings. We believe the recent rally of the stock captures near term positives. Thus, we change our recommendation from BUY to HOLD with a revised target price to | 560/share (valuing at 35x FY17E).

Exhibit 9: One year forward Mcap/sales (x)

0

5000

10000

15000

20000

Apr-1

0

Aug-

10

Dec-

10

Apr-1

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11

Dec-

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12

Dec-

12

Apr-1

3

Aug-

13

Dec-

13

Apr-1

4

3.53x

2.5x

2x


Exhibit 10: One year forward P/E(x)

050

100150200250300350400

Apr-1

0

Aug-

10

Dec-

10

Apr-1

1

Aug-

11

Dec-

11

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15x

20x

25x

30x


Exhibit 11: Valuation

Sales Growth EPS Growth PE EV/EBITDA RoNW RoCE (| cr) (%) (|) (%) (x) (x) (%) (%)

FY14 4260.6 8.9 64.2 42.5 23.0 29.8FY15E 5095.5 19.6 10.4 17.8 54.5 34.8 24.6 32.4FY16E 6156.7 20.8 12.9 24.0 44.0 28.7 27.1 34.9FY17E 7431.1 20.7 16.0 23.4 35.6 23.4 29.0 37.7



Company snapshot

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Apr-1

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16

Target | 560

Source: Bloomberg, Company, ICICIdirect.com Research Key events Date EventJul-08 Company records a sharp decline in EBITDA margin by ~550 bps YoY owing to subdued performance of industrial segment and higher input cost

Apr-09 Repurchase of FCCBs of US$40 million issued in December, 2007

Jan-10 Announcement of bonus issue 1:1

Feb-11 Company records strong earnings growth of 25% YoY in Q3FY11

May-12 Strong Q4FY12 performance, standalone net profit increased 143% YoY led by saving in interest cost

Jul-12 Forms JV agreement with hybrid coatings for manufacture of construction chemicals and to establish a JV company in India for this purpose

Dec-12 Company redeems outstanding FCCB of US$28.57 million with the premium of 39.4%

Jan-13 Strong Q3FY13 performance wherein overseas subsidiaries saw a sharp 15% YoY growth in terms of constant currency and saving in interest cost

Aug-13 Acquisition of adhesive business of Suparshva Adhesives

Oct-13 Company records overall volume growth of ~17% YoY in Q2FY14 led by sharp volume rise in industrial segments by ~22% YoY

Dec-13 Redeems outstanding 600 NCDs aggregating to | 60 crore on maturity date

Sep-14 Acquisition of adhesive business of Bluecoat Private Ltd

Source: Company, ICICIdirect.com Research Top 10 Shareholders Shareholding Pattern Rank Name Latest Filing Date % O/S Position (m) n Change (m)1 Parekh (Madhukar Balvantray) 31-Dec-14 11.11 57.0 0.02 Parekh (Narendrakumar Kalyanji) 31-Dec-14 10.50 53.8 -0.53 Parekh (Ajay Balvantray) 31-Dec-14 9.59 49.2 0.04 Parekh (Sushil Kumar Kalyanji) 31-Dec-14 8.31 42.6 0.05 Genesis Investment Management, LLP 31-Dec-14 7.78 39.9 0.06 Devkalyan Sales Pvt. Ltd. 31-Dec-14 5.09 26.1 0.07 Ishijas Chemical Pvt. Ltd. 31-Dec-14 4.80 24.6 0.08 Parekh (Mala Madhukar) 31-Dec-14 2.39 12.3 2.99 Harton Pvt. Ltd. 31-Dec-14 2.38 12.2 0.010 Vaccum Forming Company Pvt. Ltd. 31-Dec-14 2.24 11.5 0.0

(in %) Dec-13 Mar-14 Jun-14 Sep-14 Dec-14Promoter 70.1 70.1 70.1 70.0 69.8FII 15.2 15.5 15.7 15.9 15.5DII 3.8 3.8 3.5 3.5 4.1Others 10.9 10.8 10.7 10.6 10.6

Source: Reuters, ICICIdirect.com Research Recent Activity

Investor name Value Shares Investor name Value SharesParekh (Ami Ajay) 54.59m 6.34m Parekh (Kanta Balvantray) -26.03m -5.80m Parekh (Mrudula S) 25.00m 3.51m Parekh (Sanket Sushilkumar) -6.05m -1.12m Parekh (Mala Madhukar) 19.34m 2.90m Parekh (Bharati Narendrakumar) -4.31m -0.50m Axis Asset Management Company Limited 19.06m 2.25m Parekh (Narendrakumar Kalyanji) -4.31m -0.50m SBI Funds Management Pvt. Ltd. 17.07m 1.98m Goldman Sachs Asset Management International -2.12m -0.39m

Buys Sells

Source: Reuters, ICICIdirect.com Research


.

Financial summary Profit and loss statement | Crore (Year-end March) FY14 FY15E FY16E FY17ETotal Operating Income 4283.2 5121.2 6188.0 7468.9Growth (%) 16.5 19.6 20.8 20.7Raw Material Expenses 1903.8 2403.3 2868.8 3466.6Employee Expenses 442.0 512.4 607.7 715.8Marketing Expenses 152.0 181.3 207.8 250.3Packing Material 457.5 487.6 659.6 797.6Other Expenses 650.9 707.7 839.9 1013.1Total Operating Expenditure 3606.2 4292.3 5183.8 6243.4EBITDA 677.0 828.9 1,004.2 1225.5Growth (%) 12.7 22.4 21.2 22.0Other Income 44.9 39.2 58.6 64.0Interest 16.3 16.9 16.9 16.9Depreciation 81.2 120.9 145.6 161.4PBDT 705.5 851.3 1046.0 1272.7PBT 612.3 724.3 900.3 1111.3Total Tax 165.3 197.1 243.0 299.9PAT before MI 447.1 527.2 657.3 811.3Minority Interest 0.3 0.3 0.3 0.3PAT 449.8 529.9 657.0 811.0Growth (%) 6.1 17.8 24.0 23.4EPS (|) 9.0 10.5 12.9 16.0


Cash flow statement | Crore (Year-end March) FY14 FY15E FY16E FY17EProfit after Tax 449.8 529.9 657.0 811.0Depreciation 81.2 120.9 145.6 161.4Others 21.4 16.3 16.9 16.9CF bef working cap chan 547 668 820 989Net Inc in Current Assets -198.5 -253.6 -309.0 -372.7Net Inc in Current Liab. 50.0 110.0 160.2 25.6

Net CF from Op activities 398.8 524.0 670.7 642.2(Purchase)/Sale of FA -170.7 -400.0 -150.0 -200.0Increase/decrease in other investmen -193.0 58.7 100.0 -100.0Others 3.5 7.1 0.3 0.3

Net CF from Inv Activities -201.4 -232.2 -249.7 -99.7Inc / (Dec) in Equity Capital 0.0 0.0 0.0 0.0Inc / (Dec) in Loan Funds -5.1 -20.0 0.0 0.0Inc / (Dec) in Loan Funds 0.0 0.0 0.0 0.0Total Outflow of dividend -161.9 -326.7 -386.0 -445.4

Net CF from Fin. Activities -170.7 -363.7 -402.9 -462.3Net Cash flow 26.7 -71.9 18.0 80.2Cash and Cash Equi beg. 150.6 177.3 105.4 123.4Cash 177.3 105.4 123.4 203.7


Balance sheet | Crore (Year-end March) FY14 FY15E FY16E FY17EEquity Capital 51.3 51.3 51.3 51.3Reserve and Surplus 1901.4 2104.5 2375.5 2741.1Total Shareholders funds 1952.7 2155.8 2426.8 2792.4Total Debt 45.9 25.9 25.9 25.9Deferred Tax Liability 53.7 53.7 53.7 53.7Minority Interest 4.2 4.5 4.7 5.0

Total Liabilities 2056.5 2239.9 2511.2 2877.1

AssetsTotal Gross Block 1421.2 1821.2 1971.2 2171.2Less acc depreciation 715.0 835.9 981.6 1143.0Net Block 706.2 985.3 989.6 1028.2Total Fixed Assets 1164.2 1443.3 1447.7 1486.3

Other Investments 259.4 159.4 259.4 159.4

Inventory 599.7 739.9 894.0 1079.0Debtors 524.4 627.2 757.8 916.2Loans and Advances 93.7 101.9 123.1 148.6Other Current Assets 12.5 14.9 18.1 21.8Cash 177.3 105.4 123.4 203.7Total Current Assets 1407.6 1589.3 1916.4 2369.3

Total Current Liabilities 871.9 981.9 1142.0 1167.6Net Current Assets 535.7 607.5 774.4 1201.7Total Assets 2055.7 2239.1 2510.4 2876.3


Key ratios (Year-end March) FY14 FY15E FY16E FY17EPer Share DataEPS 8.9 10.4 12.9 16.0Cash EPS 10.5 12.8 15.8 19.2BV 38.5 42.5 47.8 55.0DPS 2.7 5.5 6.5 7.5Operating RatiosEBITDA Margin 15.8 16.2 16.2 16.4PAT Margin 10.5 10.3 10.6 10.9Return RatiosRoE 23.0 24.6 27.1 29.0RoCE 29.8 32.4 34.9 37.7RoIC 42.0 42.3 44.5 48.0Valuation RatiosEV / EBITDA 42.5 34.8 28.7 23.4P/E 64.2 54.5 44.0 35.6EV / Net Sales 6.7 5.7 4.7 3.9Sales / Equity 2.2 2.4 2.5 2.7Market Cap / Sales 6.8 5.7 4.7 3.9Price to Book Value 14.8 13.4 11.9 10.3Turnover RatiosAsset turnover 2.2 2.4 2.6 2.8Debtors Turnover Ratio 8.1 8.1 8.1 8.1Creditors Turnover Ratio 12.3 13.0 13.0 15.9Solvency RatiosDebt / Equity 0.0 0.0 0.0 0.0Current Ratio 1.6 1.6 1.7 2.0Quick Ratio 0.9265825 0.8651108 0.8952747 1.105044



ICICIdirect.com coverage universe (Consumer Discretionary) CMP M Cap(|) TP(|) Rating (| Cr) FY15E FY16E FY17E FY15E FY16E FY17E FY15E FY16E FY17E FY15E FY16E FY17E FY15E FY16E FY17E

Asian Paints (ASIPAI) 881 733 Buy 84,506 15.2 18.1 22.2 57.9 48.6 39.7 35.1 29.4 24.3 49.0 52.6 55.1 35.2 37.2 39.1Bajaj Electricals (BAJELE) 234 326 Buy 2,334 4.4 15.6 18.7 52.7 15.0 12.5 15.1 7.8 6.8 13.6 25.2 25.0 6.1 18.2 18.4Havells India (HAVIND) 263 253 Hold 16,409 6.5 8.9 11.2 40.6 29.4 23.5 20.1 17.0 12.6 25.1 27.2 31.7 22.2 26.5 27.6Kansai Nerolac (GOONER) 2,488 2,396 Buy 13,408 58.3 71.1 88.0 42.7 35.0 28.3 25.8 21.1 17.3 26.3 27.8 28.7 19.1 19.8 20.6Pidilite Industries (PIDIND) 569 560 Hold 28,885 10.5 12.9 16.0 54.5 44.0 35.6 34.8 28.7 23.4 32.4 34.9 37.7 24.6 27.1 29.0Essel Propack (ESSPAC) 127 127 Hold 1,995 9.6 12.5 15.6 13.3 10.1 8.2 6.0 5.0 4.2 15.6 17.2 19.2 14.5 16.7 18.1Symphony Ltd (SYMCOM) 2,230 2,764 Buy 7,800 42.5 54.7 71.8 52.5 40.8 31.1 40.0 30.9 23.4 53.8 55.4 56.2 42.3 43.4 44.0V-Guard Ind (VGUARD) 1,001 958 Hold 2,988 24.6 30.5 41.0 40.7 32.9 24.4 24.9 19.9 15.3 21.8 23.6 26.7 19.7 20.5 22.7

Sector / CompanyRoE (%)EPS (|) P/E (x) EV/EBITDA (x) RoCE (%)



RATING RATIONALE ICICIdirect.com endeavours to provide objective opinions and recommendations. ICICIdirect.com assigns ratings to its stocks according to their notional target price vs. current market price and then categorises them as Strong Buy, Buy, Hold and Sell. The performance horizon is two years unless specified and the notional target price is defined as the analysts' valuation for a stock. Strong Buy: >15%/20% for large caps/midcaps, respectively, with high conviction; Buy: >10%/15% for large caps/midcaps, respectively; Hold: Up to +/-10%; Sell: -10% or more;

Pankaj Pandey Head – Research [email protected]

ICICIdirect.com Research Desk, ICICI Securities Limited, 1st Floor, Akruti Trade Centre, Road No 7, MIDC, Andheri (East) Mumbai – 400 093

[email protected]


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