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Mint
02-06-2025
- Business
- Mint
Stocks to trade today: Trade Brains Portal recommends two stocks for 2 June
Benchmark equity indices, Sensex and Nifty 50, wrapped up last week on a cautious note, marking a second straight week of consolidation, influenced by persistent global trade tensions and uncertainty around upcoming domestic policy decisions. By week's end, the Nifty closed at 24,750.70, and the Sensex settled at 81,451.01. Today, we have picked two stocks—one from the chemical sector and the other from the pharmaceutical sector. Stocks to trade today as recommended by Trade Brains Portal Pidilite Industries Ltd (Current price: ₹ 3,125) The company has consistently achieved a consolidated net sales growth of 11% CAGR over the past decade. The company has managed to improve its Ebitda margin, which has been in a steady upward trend over the last 10 years, rising from 16% in FY15 to 23% in FY25. Moreover, net sales for FY25 stood at ₹13,094 crore, up by 6% from ₹12,337 crore in FY24. EBITDA stood at ₹3,013 crore in FY25, a growth of 11% from ₹2,707 crore in FY24. Profit before tax and exceptional items for FY25 stood at ₹2,848 crore, growing by 16% YoY. Profit after tax for FY25 was at ₹2,096.17 crore as against ₹1,747.42 crore in FY24, recording a growth of 20%. The company has a diversified portfolio, which currently caters to various industries like infrastructure, real estate, packaging, paper, leather, paints, and more. It is venturing into high-growth industries like electronics, EVs, and semiconductors. It has an exclusive partnership with CollTech Group, which has extensive experience in providing electronics adhesive solutions. This partnership may become a good synergy between both companies to expand their presence further in the electronics sector. Additionally, Brand like Roff has a lot of room for growth due to growth in the tile market, which stood at ₹43,000 crore as of FY24 and is expected to reach ₹62,000 crore by 2027. Key growth drivers for the company are penetration in rural and semi-urban markets and international expansion through various business models. On a macro view, the specialty chemicals market in India is expected to grow faster than China, increasing its market share from 3-4% in 2021 to 6% by 2026, as per a Crisil report. Also Read: FMCG stocks face margin pressure. Here's why Cipla Ltd (Current price: ₹ 1,463) The company's Indian business accounts for 42% of Cipla's revenue and grew at a healthy 7% YoY as of FY25. Cipla is the largest pharmaceutical company in India by volume. It has 26 brands that earn more than ₹100 crore in revenue. One of its brands, Foracort, became the 1st brand to cross ₹900 crore in the history Indian pharmaceutical market. In FY25, Cipla saw a growth of 8% YoY in its income from operations at ₹27,548 crore, with an Ebitda growth of 14% at ₹7,128 crore. Their Ebitda margin grew from 24.5% in FY24 to 25.9% in FY25, and the return on invested capital (ROIC) grew to 33% from 31% last year. Cipla recorded a profit after tax (PAT) growth of 28%, from ₹4,106 crore in FY24 to ₹5,273 crore in FY25, with their PAT margin expanding from 16.1% to 19.1% now. Cipla's R&D investment stood at ₹1,524 crore, which is 5.5% of revenue. The company's total debt has been reduced from ₹559 crore in FY24 to ₹438 crore in FY25, and it has been maintaining a healthy cash balance of ₹10,807 crore as of FY25. Consumer health brands such as Nicotex, Omnigel, and Cipladine ranked no. 1 in the consumer health market. Cipla's One Africa business, constituting 14% of revenue, grew at 12%, and the emerging markets and Europe business, which accounts for 12% of revenue, saw a growth of 15%. Cipla's North America business, contributing 29% of total revenue, grew marginally by 3% and secured drug approvals from ANDA & NDA for Lanreotide Injection, Nilotinib, and Nano Paclitaxel. Total ANDA & NDA portfolio and pipeline as of FY25 stood at 284, with 109 under approval and tentatively approved categories. Cipla's branded prescription business continued to outpace the market growth in key chronic therapies like respiratory, anti-infectives, urology, and cardiac. Trade Generics is back on a growth trajectory with 19 new launches in FY25, anchor brands of the subsidiary Cipla Health Limited continue to grow bigger. The company is focused on expanding its pipeline, with key respiratory, peptide, and complex generic assets in progress, and several launches expected between FY26 and FY28. Cipla has made many strategic alliances throughout the year, which have accelerated its inorganic growth. Additionally, the US president's recent plan to cut down drug prices in the country could impact the revenues of Cipla, as the company generates 29% of its revenue from North America as of FY25. Also Read: JK Lakshmi's ambitious targets are not without obstacles Market Recap 30 May 2025 On Friday, Nifty 50 closed at 24,750.70, down by 82.9 points, or -0.33%, with an RSI of 55.52 and above the 20/50/100/200 EMA in the daily time frame. The BSE Sensex closed at 81,451.01, down by 182.01 points, or -0.22%, with an RSI of 55.26, and above all four EMAs. Nifty PSU Bank was among the top gainers, closing at 6,976, surging by 195.30 points, or 2.88%, with Bank of Maharashtra leading the index, gaining 5.86%. Nifty Metal was one of the major losers, closing at 9,193.25, down by -1.69% or 158.40 points. All the major companies of this index were in red today, with Jindal Stainless Ltd. being the biggest laggard, declining -3.65% and closing at ₹644.75. Nifty IT was also among the top loser indices, down by -1.15% or 432.40 points, closing at 37,321. All the stocks in this index were in the red today, HCL Technologies being the top loser, down -1.69%, closing at ₹1,636.6. The Nifty PSE was also in the red today, closing at 9,867.95, down by -1.14% or 114 points. All the major companies were in the red today, with Oil India, RVNL, BHEL, and IRCTC down by more than 2% today. In May, Nifty touched the 25,000 mark after a decline since October 2024. Nifty touched the monthly high of 25,116.25. It grew 416.50 points, or 1.71%, this month. Trade Brains Portal is a stock analysis platform. Its trade name is Dailyraven Technologies Pvt. Ltd, and its Sebi-registered research analyst registration number is INH000015729. Investments in securities are subject to market risks. Read all the related documents carefully before investing. Registration granted by Sebi and certification from NISM in no way guarantee performance of the intermediary or provide any assurance of returns to investors. Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before making any investment decisions.
Mint
13-05-2025
- Business
- Mint
Pidilite's growth gets stickier, but valuation a sore spot
Pidilite Industries Ltd's March quarter (Q4FY25) makes one thing clear: volume growth is resilient and the momentum is being sustained by demand. Consolidated revenues grew 8.2% year-on-year to ₹3,141 crore, backed by standalone underlying volume growth of 9.8% across categories and geographies. Volume growth is at a multi-quarter high. Gross profit margin rose by 160 basis points (bps) to 55%, which is an 18-quarter high, according to data from Motilal Oswal Financial Services. Margin got support from benign input costs, especially vinyl acetate monomer (VAM), which averaged $880 a tonne in Q4, down from $925 a tonne last year. However, year-on-year Ebitda margin expansion was smaller at 26 bps to 20.1%. In fact, the metric fell as much as 356 bps versus Q3 as Pidilite ramped up advertising spends and incurred a one-time staff cost adjustment. For the full year, Ebitda margin has expanded 106 bps to almost 23% in FY25. Pidilite's operating margins are high, and it will be crucial to monitor whether the company can sustain such high levels, reckon Motilal Oswal's analysts in a 9 May report. Pidilite's management is guiding for double-digit volume growth in FY26 (domestic business), despite a high FY25 base when volume growth was 9.3%. The company is banking on a post-election construction push, rural tailwinds, and innovation-led launches such as Fevicol Hi-PER Star. Urban demand, which improved in Q4, is likely to sustain. That said, the company is watchful of the impact of uncertain global economic and geopolitical conditions. Meanwhile, Pidilite's crucial consumer & bazaar (C&B) segment, forming 81% of FY25 standalone revenues, saw 8% volume growth in Q4. Standalone C&B Ebit margin was up 60 bps year-on-year to 26.4%. Rural demand continued to outperform and urban showed a sequential pickup. The rest of the standalone revenue in FY25 came from industrial business-to-business (B2B), which saw much higher volume growth of 16.4% in Q4, led by rising construction demand and a shift to integrated, system-based solutions through Pidilite Professional Solutions. A richer project mix and operating leverage aided profitability, taking Ebit margin to a record 18.3%, up 710 bps. B2B put up a solid show for FY25 as well, clocking Ebit growth of 53%, which was far ahead of 9% C&B Ebit growth. Pidilite expects B2B growth and margin tailwinds to sustain, supported by strong infra demand and deeper engagement with EPCs and consultants. Also Read: Fevicol maker Pidilite glues itself to paints in Bharat Puri's parting stroke What next? Going ahead, investors will track if the company can sustain Ebitda margin. While lower input costs, particularly crude-linked derivatives, offer respite, those tailwinds may not last. Q4 saw a sharp spike in employee expenses due to one-off provisions, and the room for further margin expansion appears limited unless revenue growth accelerates meaningfully. Management is focused on striking the right balance between pricing, market share, and profitability—prioritising long-term sustainability over short-term margin gains. Plus, a strong balance sheet augurs well. 'Pidilite is well placed to sustain growth, sustained innovations, tie-ups to bring technologically advanced products and 2-4x growth in pioneer and growth categories (45% of sales)," said a PL Capital report dated 12 May. 'Near term margin outlook seems fine, although margins leave little scope of expansion from current levels," they added. In this backdrop, valuations are not exactly mouth-watering. Pidilite's shares trade at 65x FY26 estimated earnings, according to Bloomberg estimates—a valuation that assumes robust growth acceleration. If cost tailwinds fade and global headwinds persist, execution will need to remain airtight. Pidilite will need to prove that this volume-led comeback has staying power. Also read | Balvantray Parekh's lifelong marketing masterclass with Fevicol
