We increase our FY25/26 EPS estimates by 2.0%/1.2% given strong volume outlook across pioneer and growth segments (45% of sales, includes waterproofing, construction chemicals etc), benign raw material prices and strong tailwinds from growth in both residential and commercial Real estate. Low penetration and higher growth in Tier3/rural than urban, makes PIDI uniquely placed to gain from broad based upsurge in demand. We believe margins have limited scope to increase given that GM is already above 53% (4Q exit), however 1H margin outlook remain strong. PIDI aims at improving volume growth trajectory led by 1) tailwinds in demand from real estate cycle 2) rising share of growth and pioneer categories (45% of sales now) 3) sustained innovation across segments and 3) gains from deeper distribution reach.
OutlookWe estimate 18% EPS CAGR over FY24-26 and assign DCF based target price of Rs2980 (Rs2764 earlier) which assumes a target valuation multiple of 59.3x FY26. Retain Accumulate.
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