Sharekhan's research report on Pidilite Industries
Pidilite Industries (Pidilite) registered strong y-o-y PAT growth by over 30% in Q1FY2024 as a correction in VAM prices helped OPM surge. Volume growth recovered to double-digit in C&B business. Vinyl acetate monomer (VAM) prices have corrected to $1,150 per tonne from highs of $2,250 per tonne. The company expects EBIDTA margins to improve substantially in FY2024 to 20-24% (Q1 EBIDTA margins stood at 21.6%). Volume growth improved to 12% in Q1FY2024 from 7% in Q4FY2023. Rural demand exceeded urban demand by 1.5x. Volume growth momentum to sustain in the quarters ahead with demand environment improving.
Outlook
Stock continues to trade at a premium valuation of 68x/57x its FY2024E/FY2025E. We retain a Hold rating with a revised price target of Rs. 2,675.
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