June 13, 2016 / 17:24 IST
Prabhudas Lilladher's research report on Pidilite
PIDI’s margins are at an all time high given direct co‐relation to crude prices. We expect gross margins to peak out in 1HFY17 given that crude prices have come up by 75% from Jan lows of USD28/ barrel. We are factoring in flattish gross margins and 70bps expansion in EBIDTA margins in FY17 and 300bps decline in gross margins and 240bps decline in EBIDTA margins in FY18. We estimate 21.4% PAT growth in FY17 and 7.7% PAT growth in FY18.
We note that our margin estimates are higher than long term margin guidance of 18‐20% as given by the company. We expect premium valuations to sustain, given strong brands and long‐term growth potential in key segment of adhesives, waterproofing and construction aids. Retain ‘Accumulate’.
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