ICICI Securities recommended hold rating on Pidilite Industries with a target price of Rs 1325 in its research report dated June 19, 2020.
ICICI Securities research report on Pidilite Industries
Despite reporting 5.8% decline in consolidated revenue, Pidilite Industries (PIDI) has reported record gross margin (up 510bps YoY) in Q4FY20 driven by lower input costs. With recovery already seen in rural and semi-urban markets (accounting for 30-35% of PIDI’s revenues) and in some of its product segments like cyanoacrylate, construction chemical segments, etc, we expect sizeable volume recovery for PIDI in H2FY21.
Likely cost rationalisation and further improvement in gross margin in near term (due to falling input costs) is expected to drive its consolidated EBITDA margin higher to 24.8% in FY21E. Upgrade to HOLD.
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