Marico, Pidilite Industries hit lifetime high

Post Q3FY16, Marico (up 9%) and Pidilite Ind (up 14%) have outperformed the market as compared to 4% fall in the Sensex since February 1, 2016.

Shares of Marico, consumer products major and Pidilite Industries, largest adhesive manufacturer, were up nearly 4% each at Rs 242 and Rs 648, respectively, hitting their respective lifetime highs on the BSE in intra-day trade today.

Post October-December (Q3FY16) results, Marico (up 9%) and Pidilite Industries (up 14%) have outperformed the market after reported a strong set of numbers as compared to 4% decline in the S&P BSE Sensex since February 1, 2016.

On a consolidated basis, Marico posted a net profit of Rs 201 crore against Rs 162 crore while total income grew to Rs 1,556 crore from Rs 1,453 crore in the year ago quarter. Earnings before interest, taxes, depreciation, and amortization (EBITDA) margins expanded to 18.9% from 16.3%.

Over the medium term, operating margin of about 18% to 19% is sustainable. However, in the short term, given the soft commodity price tables, the operating margin may have an upward bias, Marico said post its results announcement.

“Given the persisting weakness and pessimistic outlook indicated by several managements across the fast moving consumer goods (FMCG) spectrum, we believe Marico provides us the relative comfort in comparison to other FMCG names,” said Spark Capital in a report.

Pidilite Industries posted 50% year on year (yoy) growth in consolidated net profit at Rs 186 crore in Q3FY16. EBITDA margins was also strong at 22%, up 600bps yoy.

Analysts at Emkay Global Financial Services and HDFC Securities maintain ‘buy’ rating on the stock with target price between Rs 670-Rs 676.

“We are enthused by the improvement in consumer & bazaar growth profile; further urban demand uptick and strong innovation pipeline are key revenue drivers, while margin performance is expected to remain stellar,” Emkay Global Financial Services said in a report dated February 3, 2016.

“We are enthused by the volume-led revival in consumer and bazaar (C&B) and the industrial products business. Growth in FY17 could accelerate (especially volume) with a possible revival in urban housing construction, home improvement and rising IIP”, said HDFC Securities in recent report.