Add Pidilite to Strengthen Your Folio – HDFC

Pidilite Industries Ltd (PIL) has been a pioneer and market leader in the field of consumer and speciality chemicals in India. Its brand Fevicol, Steelgrip, Acron, Dr.Fixit, Fevitite and M-seal are some of the most trusted brands in India.

PIL expanded the Adhesives and sealants range by introducing marble glue and wood re-inforced adhesive under brand name Fevicol, fast setting epoxy adhesive under the brand name Fevitite Super Fast, new generation adhesive under the brand name Cheetah Glue, easy to use sealant under the brand name Dr. Fixit Gapfill and masking tape under the brand name US-PRO. PIL recorded exports in the Consumer and Bazaar Products of Rs.51 crs in FY07, a staggering growth of 60%. Exports of Speciality Chemicals grew by 33.3% to Rs.46 crs. Products of PIL have found good acceptance in international markets with exports to more than 50 countries.

PIL’s revenues have grown remarkably by about 18% CAGR over the last 5 years. This has been mainly due to concerted efforts towards brand building activities in its consumer and bazaar segment. FY07 was a historical year for PIL, wherein all the segments grew significantly. Net sales grew by about 21% in FY07, backed by 14-16% growth in the last 3-4 years. The net profit growth has been pretty steady in the range of 20-22% over the last 2-3 years.

PIL is in a comfortable position and satisfy its wants of further acquisitions and expansion plans. The stock is quoting a PE of 21 times its FY08 (E) earnings. One may enter PIL in the 173-184 band for a target of Rs.225 in 3-4 quarters says HDFC Securities Analyst.