Buy Pidilite Industries, target of Rs 195: Bonanza

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Buy Pidilite Industries, target of Rs 195: Bonanza

Bonanza has recommended a buy rating on Pidilite Ind, with price tgt of Rs 195. Pidilite Ind is a dominant player in adhesive and sealant mkt in India. Company cleared all the highcost inventory of raw materials, the low-cost inventory of raw materials together with price increases boosted OPM 510 bps to 23.3% in Q1 of FY 2010.

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Bonanza has recommended a buy rating on Pidilite Industries , with price target of Rs 195, in its report dated August 31, 2009.

"Pidilite Industries is a dominant player in the adhesive and sealant market in India. The company cleared all the highcost inventory of raw materials, the low-cost inventory of raw materials together with price increases boosted OPM 510 bps to 23.3% in Q1 of FY 2010. Thus, strong brands enable the company to generate better sales and margin, baring short-term aberration. Going ahead with crude derivatve still priced lower, we expect the company to post better OPM for FY10. The company is about to start off its manufacturing operations at Bangladesh and African plants by later this. We have projected sales from these facilities with a lag effect of six months. We have projected that the company would post an EPS of 9.93, which is a conservative estimate in view of Q1FY10 EPS of 3.3. At this EPS the company is trading at an earning multiple of 14.1x. We recommend investors to buy the counter in 135-145 range with a target of Rs 195 in medium term," says Bonanza's report.

Disclaimer: The views and investment tips expressed by investment experts on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

To read the full report click on the attachment......