Sharekhan's research report on Pidilite Industries
Pidilite Industries’ (Pidilite’s) Q1 performance beat estimates driven by higher-than-expected EBIDTA margins of 23.9% (versus expectation of 21-21.5%); standalone volumes grew ~10%. Company will maintain prices if there is not much volatility in input prices. Volume and value growth should even out in H2FY25. Domestic volume growth is expected to remain strong; Africa will maintain double-digit growth amongst international markets. EBIDTA margins would remain at higher of range of the expected band of 20-24% with input prices remaining stable.
Outlook
Stock has run up by ~20% since our upgrade to Buy on 24 January, 2024. Valuations are stretched at 76x/65x FY25E/26E EPS, respectively. With unfavourable risk-reward ratio we downgrade rating on the stock from Buy to Hold with a revised PT of Rs. 3,397.
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