Accumulate Pidilite Industries; target of Rs 3318: Prabhudas Lilladher

Prabhudas Lilladher's research report on Pidilite Industries

PIDI analysts meet reinforced its vision to consistently deliver double digit growth (11% CAGR over the last 10 years) by continuing to invest behind its engine of core, growth & pioneer categories. PIDI’s innovations focus, and distribution expansion is enabling the company to not only grow fast in Pioneer and growth categories (48% of sales versus 20% 10 years back) but even achieve double digit UVG in mature category like Adhesives (Fevicol). While Dr Fixit, Roff and IBD will grow fast, it has Araldite, WD40, ICA Pidilite as strong segments in pioneer categories. PIDI has Unofin, Electronics and Haisha paints as nascent segments which will be next pioneer categories.

Outlook

We expect PIDI to post sales and PAT CAGR of 11.2% and 13.2% over FY25-27 led by strong volume growth as it is operating at peak of the cycle EBIDTA margins (~23%+ in FY25). While we remain structurally positive on PIDI, valuations at 51.2xFY27 EPS deter us to place a strong Buy. We maintain accumulation with a target price of Rs 3318 (DCF based).