Accumulate Pidilite Industries; target of Rs 3318: Prabhudas Lilladher

Prabhudas Lilladher's research report on Pidilite Industries

PIDI has shown 9.7% UVG in a tepid demand environment as its strategy of developing pioneer categories and entering newer segments continues to pay off. B2B continued its growth momentum driven by Industrial & Project verticals whereas B2C improved sequentially. IBD has witnessed a slowdown in sales while maintaining flat margins. Near term outlook remains cautiously optimistic on hopes of budget, real estate cycle and Govt push in budget, which can start playing out from 1Q26. PIDI is open to exploring tie ups and entry in segments like adhesives or specialty chemicals for EV/Semiconductor or electronic manufacturing, however it is long haul business. PIDI is well placed to sustain growth sustained innovations, tie-ups to bring technologically advanced products and 2-3x growth in pioneer and growth categories (45% of sales). Near term margin outlook seems fine, although margins leave little scope of expansion from current levels.

Outlook

We estimate 13% EPS CAGR over FY25- 27 and assign DCF based target price of Rs3318 (Rs3339 earlier). Retain Accumulate.

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