Sharekhan has given Buy recommendation for Pidilite Industries with a target price of Rs. 2550 in its research report issued on May 19, 2022
Sharekhan’s research report on Pidilite Industries
Pidilite Industries (Pidilite) Q4FY2022 numbers were below par with subdued sales volume and a sharp decline in OPM led by raw material inflation resulting in 18% y-o-y decline in PAT. VAM prices are over $2,500/tonne currently (Q4 consumption cost was $2,420/tonne) compared to $1,180/tonne in Q4FY2021 and $1,968/tonne in Q3FY2022. VAM prices are expected to correct in H2FY2023. Pidilite will try to maintain OPM at ~20-24% in the medium term. Consumer & bazaar (C&B) business grew by 32%, with a 20% rise in volumes. The management is confident of maintaining good volume growth momentum in the medium term.
Stock has corrected by 22% in past five months, which provides favourable risk-reward to enter into a quality building material play with a leading position in the waterproofing & adhesives space. We maintain a Buy recommendation on the stock with a revised PT of Rs. 2,550.