Pidilite Industries slipped on selling pressure on Wednesday, after dismal third quarter results from the company.

By 11:35 IST, the scrip of the adhesives maker was down by 3.24% to Rs 252.50 on the BSE, recording a volume of 2,967 shares. In the last 16 sessions, the scrip rose by 16.5% to its new 52-week high of Rs 262.15 on 21 January 2003, from Rs 225 on 30 December 2002.

Dealers said the fall on the Pidilite counter was mainly due to the disappointment from the company's Q3 results. Investors had built huge positions in the stock on hopes of good Q3 results from the company. With their hopes belied, they offloaded the stock, booking profit in the bargain.

For the third quarter ended 31 December 2002, Pidilite registered a net profit of Rs 17.58 crore, compared to Rs 17.57 crore in the corresponding period of the previous year. However, net sales increased by 21.45% to Rs 157.55 crore (Rs 1.57 billion) from Rs 129.72 crore (Rs 1.29 billion).

The almost flat net profit of Rs 17.58 crore has disappointed the market, which had expected it to be in the range of Rs 20-22 crore, up 14-25%. However, net sales have surpassed expectations of Rs 145-150 crore (Rs 1.45-1.5 billion), with the company registering net sales at Rs 157.55 crore (Rs 1.57 billion), a growth of 21.45%.

Meanwhile, analysts said the company's growth is likely to come from its new products and acquired brands like M-Seal, Mr. Fixit, Ranipal and Steelgrip. These products are expected to be the key growth drivers for the company. Therefore, analysts feel that after a correction, the Pidilite scrip may stabilise.

Pidilite is a market leader in the adhesive & sealant segments, with a dominant market share in each of the product category. In the premium adhesives segment, it enjoys a market share of around 85%.

The company, best known for its Fevicol brand of adhesives, over the past few years, has transformed its business from a combination of branded and commodity business to primarily a brand-driven business. Today, its branded business accounts for around 71% of the revenues, while the rest comes from speciality industrial chemicals & others (commodity business).

Pidilite's proactive market-driven approach, coupled with a strong R&D base, has helped the company to develop new products and categories cost-effectively and become a dominant player. This is evident from the fact that nearly 20% of its revenues comes from new products introduced by it in the last four years, according to a research report on Pidilite by a local brokerage.

The company has over 400 products in its kitty, catering to diverse sectors like construction, plastics, textiles, paper, leather, paints, engineering etc. This partly insulates it from sectoral fluctuations in the end user industry. Some of its popular brands are Fevicol, Fevistik, Fevikwik, Fevibond, Feviseal, Fevicryl, M-Seal, Acron, Dr.Fixit etc.

Meanwhile at the current market price of Rs 252.50, the Pidilite scrip discounts its third quarter's (ended 31 December 2002) annualised earning per share (EPS) of Rs 27.86 by an price-to-earnings (PE) multiple of 9.06.