Sharekhan's research report on Pidilite Industries
Pidilite’s dominance in the construction chemical and adhesive space and strong balance sheet will keep valuations at premium levels. With 50% drop in COVID-19 cases from its peak of 3.9lakh cases in the second wave, India is gearing up for unlock. Gradual unlock in respective states would result in recovery in construction chemical products due to pent-up demand. Low penetration for waterproofing products, improved demand for construction chemicals in rural areas, and market share gains from small players are key growth drivers in the medium term. Spike in VAM prices and uncertain demand in the current environment are key headwinds in the near term. The company is targeting to maintain OPM of 20%-24% in the medium term.
Outlook
We maintain our Buy recommendation on Pidilite Industries Limited (Pidilite), with a revised PT of Rs. 2,315.
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