Motilal Oswal has given Neutral recommendation for Pidilite Industries with a target price of Rs. 2035 in its research report issued on May 19, 2022
Motilal Oswal’s research report on Pidilite Industries
Sales in 4QFY22 were in line. Its revenue performance was commendable, given the COVID-led disruptions in Jan’22 and a high base of 44.7% in 4QFY21. Two/three-year CAGR was also healthy at 27.5%/15.2%. Higher than expected raw material prices eroded gross margin, resulting in a significant miss on EBITDA in 4QFY22. While some price hikes were taken in May’22, the management expects VAM prices to remain elevated over the next three-to-four months before softening in 2HFY23.
The rich multiple of 57x FY24E EPS adequately captures the stock’s fair value. We maintain our Neutral rating.