Accumulate Pidilite Industries; target Rs 282: P Lilladher

Prabhudas Lilladher's report on Pidilite Industries

"We are cutting FY14 and FY15 EPS estimates of PIDI by 5 percent to factor in impact of 1) lower volume growth in a slowing economy and 2) increase in input costs consequent to rupee depreciation. PIDI's Q1 volumes in Consumer and Bazaar grew 7.5 percent even as industrial chemicals volumes declined in low single digits. Although PBT from operations grew 21.2 percent, PIDI faces strong headwinds in the near term. We remain positive on the long-term growth prospects and market position of PIDI with brands like Fevicol and Dr.Fixit; however, slowdown in economy and postponement of discretionary spends will impact growth in the near term. We believe recent rupee depreciation will increase the landed cost of VAM (Vinyl Acetate Monomer) and necessitate price increase which can further delay recovery in demand. We now estimate 15.5 percent PAT growth in FY14 and 19.5 percent CAGR over FY13-15. PIDI trades at 20xFY15 EPS of Rs12.6, post recent correction in stock price. We retain 'Accumulate' with a price target of Rs 282 (Rs297 earlier), 11 percent upside," says Prabhudas Lilladher research report.

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