Let's take a look at its past performance. For the year 1998-99, net sales grew by 12.34 per cent to Rs 330.07 crore. This has been the highest growth rate recorded by the company in the last five years. The fact that the phenomenal growth was achieved despite the all-round slowdown in demand makes this all the more impressive. Sales grew by 10.22 per cent and 11.93 per cent in 1997-98 and 1996-97, respectively.

Even more impressive is the fact that the company has managed to clock the highest profit margin in the last 10 years. For 1998-99, the OPM stood at 19.34 per cent, significantly higher compared to 17.70 in 1997-98 and 15.28 percent in 1996-97. Higher value addition and stringent cost control, coupled with a fall in raw material prices, have helped to improve margins.

As far as the growth at the net level is concerned, at Rs 37.33 crore (netting an EPS of Rs 30.49), the net profit was up by 36.79 per cent during 1998-99. While the financial performance has been impressive, the stock market is more excited about the expectation of a hive-off of its industrial adhesive division which contributes over 30 per cent to its sales.

Since profit margins for this division have been lower in comparison to its main business, a hive-off would give a major boost to its overall profit margins, besides providing a focus to its core segment. According to management, the company is in the process of hive-off or a complete sale, whichever is suitable. The time frame, however, is not yet known.

The company is the leader in the premium segment with a market share of more than 80 per cent. The success of its Fevicol brand is the main salesdriver.

For the future, while competition from the MNcs is likely to increase, the company is well-equipped to face any kind of pressure, feels the management.Launches in new segments is just one of the several steps being taken to remain ahead in any competition.

The company has launched a new brand, Acron, to cater to the demand from the school and art segment. The market for this is estimated to be as huge as Rs 70 crore. The company has also launched new products like Feviseal Easymix, Woodfin, a foam adhesive, Fevikwik, Fevicol SR 404, and Pidifin-waterproofing which has been a huge success in rural areas. The company is also focusing on auto-related products like polyester putty. According to the management, there has been great emphasis on in-house R&D.

The company has also raised its ad budget to Rs 16 crore in the current year. The Fevicol brand is amongst the top 20 brands in the country. The company also has good hold on marketing with a strong network of over 3 lakh retail outlets. As ofoverall growth, the demand for adhesive is expected to grow at the rate of 7-9 per cent in the near future. And with its strong retail base, and its Fevicol brand, the company will continue to command a premium over other players in the sector.

While lower raw material prices (VAM prices) have been of help to the company's profit margins in the recent past, improved vam prices is unlikely to affect the profit margins as the company is capable of passing on the additional cost to the customers. Financially, reduced borrowing would also mean a lower interest burden. Overall, the company is expected to produce good results in the years to come, and that is good for the stock market.

But more than the financials, the fact that Pidilite Industries owns the Fevicol brand may play a major role in giving a major boost to its discounting. Perhaps, Pidilite is the only listed Indian company which owns strong brands like Fevicol. Nirma is a household name, but is not owned by the listed company. In the case ofMarico too, till recently, the Parachute brand was not owned by it. Sooner or later, the market would realise this and would give a higher discounting to the stock. As for the problem of liquidity, the stock split will remedy that.