Sharekhan has given Hold recommendation for Pidilite Industries with a target price of Rs. 2850 in its research report issued on Aug 11, 2022

Sharekhan’s research report on Pidilite Industries

Pidilite Industries’ (Pidilite’s) Q1FY2023 performance beat ours as well the street’s expectation with strong revenue and PAT growth of 60% and 64%, with robust demand across key markets. OPM fell by 87 bps y-o-y to 17.1% due to higher input prices. Pidilite Industries’ (Pidilite’s) Q1FY2023 performance beat ours as well the street’s expectation with strong revenue and PAT growth of 60% and 64%, with robust demand across key markets. OPM fell by 87 bps y-o-y to 17.1% due to higher input prices. Strong urban demand (especially in projects, home improvement and real estate segments) has led to strong volume growth. Rural demand (one-third of domestic revenues) is witnessing pressure but expected to recover from H2FY2023.

Outlook

Stock has good run-up of 24% in last three months and is currently trading at 85.9x/65.2x its FY2023/24E earnings. With unfavourable risk-reward, we downgrade our rating on stock to Hold from Buy earlier with a revised PT of Rs. 2,850.

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