Accumulate Pidilite Industries; target Rs 579: P Lilladher

Prabhudas Lilladher's report on Pidilite Industries

"Pidilite Industries, we are increasing FY16 and FY17 EPS estimates by 8-15% to factor in benefits of decline in prices of input costs following sharp decline in crude prices. We expect gradual recovery in demand linked to overall economy. PIDI has brands like Fevicol, Dr Fixit, Roff and M-Seal to cater to expected upsurge in demand. PIDI has undertaken another 2-3% price increase in Fevicol (3rd in FY15) which reinforces our confidence in the pricing power and ability of the company to maintain strong growth and margin profile in coming years. We remain positive on long term growth potential in PIDI, given 1) renewed focus of GOI on housing sector 2) expected pick-up in construction and infrastructure development and 3) higher demand in Industrial segment due to expected pick-up in economy. We are increasing FY16 and FY17 EPS estimates to Rs 15.6 and Rs 18.4 showing 32% PAT CAGR over FY15-17. Although valuations seem stretched in the near term, we retain Accumulate for long term gains (TP Rs 579)", says Prabhudas Lilladher research report.

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