Share Trading Tips

Pidilite Industries is the market leader in adhesives and construction chemicals, hobby colors and polymer emulsions in India. Company’s brand named Fevicol has become synonymous with adhesives to millions in India and is ranked amongst the most trusted brands in India. Pidilite is also growing its International presence through acquisitions and setting up manufacturing facilities and sales offices in important regions around the world. Fevicol is now the largest selling adhesives brand in Asia. Company product range includes Adhesives and Sealants, Construction and Paint Chemicals, Automotive Chemicals, Art Materials, Industrial Adhesives, Industrial and Textile Resins and Organic Pigments and Preparations. Most of the products have been developed through strong in Pidilite Industries reported a considerable rise in standalone net profit for the quarter ended Sep 2009. During the quarter, the profit of the company rose 157.96% to Rs 855.40 million from Rs 4849.80 million in the same quarter previous year. Net sales for the quarter rose marginally 5.34% to Rs 5,108.80 miffion, while total income for the quarter rose marginally 5.5l% to Rs 5,120.70 million, when compared with the prior year period. Company reported earnings of Rs 3.38 a share during the quarter, registering I 58.02% growth over prior year period. The company reported a good operating profit margin of 23.73% compared to l5.3l% of corresponding previous quarter.

The company is setting up an Elastomer plant in Dahej (Sez) the total capex cost for the project is begged at Rs 530 Cr. In FY09, one new facility for manufacture of Construction Chemicals was set up at Kala-amb, Himachal Pradesh. The company plans to further expand its Kala-Amb facility by 10000 tonnes. The company is about to start off its manufacturing operations at Bangladesh and African plants by later this year. The company has close to Rs 160 Cr cash on its books that translate to Rs.6 per share. The company cleared all the high cost inventory i raw materials, the low- cost inventory of raw materials together with price increases boosted OPM 510 bps to 23.3% in Q2 of FY 2010. The company has the largest market share in domestic adhesive and sealant Industry. It has been increasing its presence abroad.
While markets have corrected by around 10 percent since last month, the stock showed some major accumulation at the price of Rs. 194. We recommend a “BUY” on the stock with a target price of Rs.237 for medium term.