Pidilite Industries Limited is an Indian multinational company known primarily for its specialty chemicals and consumer products.
Founded in 1959, it is best recognized for its flagship product, Fevicol, an adhesive that has become a household name in India. The company operates in
various segments, including adhesives, construction chemicals, and automotive chemicals, and also offers products in art and craft, industrial applications,
and more.
Pidilite focuses on innovation and quality, catering to both retail and industrial markets. It has a significant presence in the Indian market and is expanding its
footprint internationally. The company's commitment to sustainability and community development is also notable, making it a respected player in the
industry.
Pidilite Industries showcases a strong financial performance with robust liquidity, as indicated by current and quick ratios above industry norms. Profitability
is solid, with increasing net and operating margins reflecting effective cost management. The asset turnover and inventory turnover ratios demonstrate
efficient use of resources. Furthermore, a low debt-to-equity ratio signals minimal financial risk, while a high interest coverage ratio indicates a strong ability
to meet interest obligations. Overall, the company is well-positioned with strong operational efficiency and financial health.
Liquidity Ratios:
Current Ratio: The current ratio measures a company's ability to pay its short-
term liabilities with its short-term assets. A current ratio above 1 indicates that
the company can cover its obligations. The declining trend (from 2.09 to 1.73)
suggests a slight reduction in liquidity but still indicates a healthy position.
Quick Ratio: The quick ratio, or acid-test ratio, excludes inventory from current
assets, providing a more stringent measure of liquidity. A quick ratio above 1
indicates strong short-term financial health. The decrease from 1.58 to 1
indicates a tightening of liquidity, primarily reflecting a decrease in liquid assets
relative to current liabilities.
Profitability Ratios:
Net Profit Margin: This ratio measures how much profit a
company makes for every dollar of revenue. The increase from 10.86% to
14.14% shows an improvement in profitability, indicating better cost
management or higher sales efficiency.
Operating Margin: The operating margin indicates the percentage of revenue
that remains after covering operating expenses. The increase to 20.23%
suggests improved operational efficiency and better control over operating
costs, enhancing overall profitability.
Efficiency Ratios:
Asset Turnover Ratio:
This ratio measures how efficiently a company uses its assets to generate revenue. A slight
decline from 1.1 to 0.97 indicates a decrease in asset efficiency, suggesting that the company
may not be utilizing its assets as effectively as before.
Inventory Turnover Ratio:
This ratio indicates how many times a company sells and replaces its inventory over a period.
A stable inventory turnover suggests effective inventory management. The slight decline from
3.28 to 3.16 indicates a small reduction in sales efficiency relative to inventory levels.
Leverage Ratios:
Debt to Equity Ratio:
This ratio measures a company’s financial leverage, comparing total liabilities to shareholders'
equity. A low debt-to-equity ratio indicates that the company is not heavily reliant on debt to
finance its operations. The stability in this ratio shows prudent financial management.
Interest Coverage Ratio:
This ratio measures a company's ability to pay interest on its outstanding debt. A high interest
coverage ratio (above 1.5 is typically considered safe) indicates that the company generates
significantly more income than needed to cover interest expenses. The high values (55.61)
demonstrate strong financial health and a comfortable buffer for meeting interest obligations.
