Sharekhan's research report on Pidilite Industries
Pidilite Industries (Pidilite’s) Q4FY2023 performance was soft with 7.3% y-o-y revenue growth, while EBITDA margin improved by 108 bps y-o-y to 17.1% (lagging ours as well as the street’s expectation of 18-19%). PAT grew by 12.4% y-o-y to Rs. 285.9 crore. Vinyl acetate monomer (VAM) prices have corrected to $1,100 per tonne from highs of $2,500 per tonne. The company expects EBIDTA margins to improve substantially in FY2024 and will stay in the range of 20-24% (March exit EBIDTA margins stood at 20%). Volume growth improved to 7% in Q4 from 1% in Q3. With expected price cuts in some key products, volume growth is set to improve in the coming quarters. Management targets double digit volume growth in the coming years.
Outlook
Stock continues to trade at a premium valuation of 67x/56x its FY24E/FY25E. We retain Hold with a revised price target of Rs. 2,600.
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