Pidilite Industries expands business portfolio with lending venture; details inside

Yesterday Pidilite Industries which is the leading manufacturer of adhesives and sealants, held a board meeting and reported financial results for the second quarter of FY24 and more importantly company intends to set up a lending business. Yesterday the scrip closed at Rs 2,473.05. Today, it opened at Rs 2,469.95 and currently it is trading at Rs 2,460.20, down by 0.52%. The shares of the company have a 52-week high at Rs 2,796.15 and it has a 52-week low at Rs 2,250.85. The company currently commands a market capitalization of approximately Rs 1,25,121 crore.

The company is expanding its business portfolio by venturing into the lending sector. The company plans to establish a new business segment dedicated to providing credit to its domain ecosystem, primarily in the form of small-value retail loans. To facilitate this endeavour, Pidilite has identified and intends to acquire Pargro Investments Private Limited, an existing NBFC belonging to its promoter group. Pargro, currently inactive in lending operations, will be acquired through a wholly owned subsidiary under a Share Purchase Agreement (SPA) at a fair value of up to Rs 10 crore.

The acquisition is expected to be completed by March 31, 2024, subject to necessary approvals and regulatory compliance. Over the next two years, Pidilite anticipates investing up to Rs 100 crores in tranches to build and strengthen its new lending business. This strategic move aims to support the growth and development of Pidilite’s domain ecosystem by providing access to essential financial resources.

The company has reported a 35.7% increase in net profit to Rs 459 crore for Q2FY24. In the same period, net sales have increased by 2.2% to Rs 3065 crore. Pidilite Industries Limited is a leading manufacturer of adhesives and sealants, construction chemicals, craftsmen products, DIY products, and polymer emulsions in India. Most of the products have been developed through strong in-house R&D. Fevicol has become synonymous with adhesives to millions in India and is ranked amongst the most trusted brands in the country as a product of the Pidilite Industries. Some other major brands are M-Seal, Fevikwik, Fevistik, Roff, Dr Fixit, Fevicryl, Motomax, Hobby Ideas, and Araldite.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.