Pidilite Industries's fundamentals demonstrate strong growth profile

04-06-2014 • About Pidilite Industries ($PIDILITIND) • By InTwits

Have you thought about Pidilite Industries as a growth stock? Its revenue performance, profitability and healthy financial model stands it out vs. other public companies on the market.

Growth story

Pidilite Industries showed fast growth in the last financial year. The company's revenue surged on 16.5% in FY2014. In addition to revenue Pidilite Industries also keeps delivering EBITDA growth. It was 13.2% in FY2014

In the longer period Pidilite Industries showed fast revenue growth of 17.4% from FY2011 to FY2014 annually. EBITDA surged on 12.2% from FY2011 to FY2014 annually.

Pidilite Industries ($PIDILITIND) financials for the last 5 years

mln. INR	FY2010	FY2011	FY2012	FY2013	FY2014
Revenue	58,262	26,439	31,097	36,781	42,832
Revenue growth, %		-54.6%	17.6%	18.3%	16.5%
SG&A, %
EBITDA	4,006	4,754	4,997	5,935	6,718
EBITDA growth, %		18.7%	5.1%	18.8%	13.2%
EBITDA margin, %	6.88%	18.0%	16.1%	16.1%	15.7%
Net Income	2,770	3,100	3,244	4,240	4,498
Net Income margin, %	4.75%	11.7%	10.4%	11.5%	10.5%
CAPEX	790	1,275	1,630	1,081	1,895
CAPEX/Revenue, %	1.36%	4.82%	5.24%	2.94%	4.42%
Debt	4,381	3,360	3,213	1,112	459
Cash	444	834	768	1,495	1,760
Net Debt/EBITDA	1.0x	0.5x	0.5x	-0.1x	-0.2x
ROIC, %	24.6%	29.3%	27.4%	29.3%	29.8%
ROE, %	35.4%	31.7%	27.0%	28.5%	25.0%

Profitability and return on investment

EBITDA margin declined slightly from 16.1% in FY2013 to 15.7% in FY2014. In the last 3 years the company's EBITDA margin dropped on 2.30 pp from 18% in FY2011 to 15.7% in FY2014.

Pidilite Industries shows attractive ROIC at 29.8% for the last 12 months which assumes stable development model. During the last three years it increased slightly - it was 29.3% in FY2011. It's average ROIC for the last three years was 28.8%.

Pidilite Industries's Net Income margin decreased on 1 pp from 11.5% to 10.5% in FY2014. In the last 3 years the company showed big decline in Net Income margin of 1.20 pp from 11.7% in FY2011 to 10.5% in FY2014.

Pidilite Industries operates at ROE of 25.0%. For the last three years the average ROE was 26.8%.

Capital expenditures (CAPEX)

Pidilite Industries's CAPEX/Revenue was 4.42% in FY2014. CAPEX/Revenue decreased on 0.397 pp from 4.82% in FY2011 to 4.42% in FY2014. It's average level of CAPEX/Revenue for the last three years was 4.20%.

Leverage (Debt)

The company has negative net debt at -0.2x Net Debt/EBITDA - at the same time with high growth. If we look for the longer period Pidilite Industries's leverage dropped on 0.72x from 0.53x in FY2011 to -0.19x in FY2014.

Peers in Specialty Chemicals

Below we provide Pidilite Industries benchmarking against other companies in Specialty Chemicals industry for the last 5 years. We show data for the top-5 companies by key financial metric together with the median value for all the companies in the industry.

Top companies by Revenue growth, %

	FY2010	FY2011	FY2012	FY2013	FY2014
Top 5
Dai-Ichi Karkaria ($DAICHI)		-68.8%	20.7%	31.4%	45.4%
Sudarshan Chemical Industries ($SUDARSCHEM)		-49.4%	10.5%	9.1%	28.2%
Vinati Organics ($VINATIORGA)		-63.9%	38.7%	23.6%	25.9%
Adi Finechem ($ADIFINCHM)		-66.2%	69.4%	26.7%	23.3%
Nocil ($NOCIL)		-45.8%	6.4%	1.8%	22.3%
Median (19 companies)		-50.4%	20.9%	15.9%	7.7%
Pidilite Industries ($PIDILITIND)		-54.6%	17.6%	18.3%	16.5%

Top companies by EBITDA margin, %

	FY2010	FY2011	FY2012	FY2013	FY2014
Top 5
Vinati Organics ($VINATIORGA)	6.5%	21.7%	21.7%	21.8%	22.7%
Adi Finechem ($ADIFINCHM)	1.5%	18.2%	15.1%	14.0%	22.1%
Solar Industries India ($SOLARINDS)	5.3%	18.1%	18.5%	17.5%	17.9%
Ultramarine & Pigments ($ULTRAMAR)	9.7%	20.1%	18.0%	15.5%	17.4%
Meghmani Organics ($MEGH)	8.3%	14.0%	15.9%	18.2%	14.3%
Median (17 companies)	5.4%	11.2%	10.6%	10.5%	10.2%
Pidilite Industries ($PIDILITIND)	6.9%	18.0%	16.1%	16.1%	15.7%

Top companies by CAPEX/Revenue, %

	FY2010	FY2011	FY2012	FY2013	FY2014
Top 5
Adi Finechem ($ADIFINCHM)	0.2%	8.2%	7.3%	4.8%	12.6%
Solar Industries India ($SOLARINDS)	1.4%	14.2%	13.0%	9.9%	12.3%
Nitta Gelatin India ($NITTAGELA)	5.5%	21.3%	8.8%	4.6%	8.5%
Meghmani Organics ($MEGH)	9.4%	9.9%	10.2%	10.3%	7.9%
Nocil ($NOCIL)	0.8%	6.5%	19.6%	19.0%	4.7%
Median (12 companies)	1.4%	7.3%	6.5%	4.7%	3.8%
Pidilite Industries ($PIDILITIND)	1.4%	4.8%	5.2%	2.9%	4.4%

Top companies by ROIC, %

	FY2010	FY2011	FY2012	FY2013	FY2014
Top 5
Adi Finechem ($ADIFINCHM)	3.0%	27.6%	30.6%	29.8%	46.4%
Vinati Organics ($VINATIORGA)	36.1%	31.4%	29.6%	26.2%	30.6%
Plastiblends India ($PLASTIBLEN)	15.6%	19.4%	18.3%	15.8%	24.0%
Keltech Energies ($KELENRG)	42.3%	11.5%	15.3%	12.8%	23.0%
Ultramarine & Pigments ($ULTRAMAR)	17.6%	22.8%	20.0%	16.3%	20.8%
Median (26 companies)	17.6%	16.3%	15.3%	15.0%	12.3%
Pidilite Industries ($PIDILITIND)	24.6%	29.3%	27.4%	29.3%	29.8%

Top companies by Net Debt / EBITDA

	FY2010	FY2011	FY2012	FY2013	FY2014
Top 5
Cochin Minerals & Rutile ($COCHINM)	1.6x	0.7x	-0.0x	-0.0x	32.3x
Alkali Metals ($ALKALI)	0.9x	4.3x		5.1x	11.6x
Vikas Globalone ($VIKASGLOB)		0.0x	2.5x	4.4x	4.9x
Jayant Agro-Organics ($JAYAGROGN)	5.6x	3.9x	2.8x	3.1x	4.6x
Meghmani Organics ($MEGH)	5.0x	4.8x	4.2x	3.7x	4.3x
Median (19 companies)	0.6x	1.3x	1.4x	1.5x	1.0x
Pidilite Industries ($PIDILITIND)	1.0x	0.5x	0.5x	-0.1x	-0.2x

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