Neutral on Pidilite Industries, target price Rs 1385: Motilal Oswal

Pidilite Industries Ltd., incorporated in the year 1969, is a Large Cap company (having a market cap of Rs 76145.38 Crore) operating in Diversified sector.

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Promoters held 70.2 per cent stake in the company as of June 30, 2020, while FIIs held 11.2 per cent, DIIs 8.1 per cent and public and others 10.5 per cent.
Motilal Oswal has given neutral rating to Pidilite Industries with a target price of Rs 1385. The share price moved up by 0.35 per cent from its previous close of Rs 1497.80. The stock’s last traded price is Rs 1503.05.
Pidilite Industries Ltd., incorporated in the year 1969, is a Large Cap company (having a market cap of Rs 76145.38 Crore) operating in Diversified sector.

Financials
For the quarter ended 30-06-2020, the company reported a Consolidated sales of Rs 877.84 Crore, down 43.17 % from last quarter Sales of Rs 1544.68 Crore and down -56.47 % from last year same quarter Sales of Rs 2016.81 Crore. The Company reported net profit after tax of Rs 15.35 Crore in latest quarter.
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Investment Rationale
The brokerage maintains a Neutral rating on the stock from a one-year perspective on account of fair valuations (58.5x FY22 EPS) and uncertain near-term recovery, especially in the B2B part of the business (~15% of sales). However, initiatives to grow the Growth and Pioneer categories could go a long way in revitalizing medium-term sales and earnings growth, which have dropped significantly in the past four years. These metrics reported an 8–10% CAGR over the past four years v/s ~16% and ~20%, respectively, in the first six years of the decade.

Promoter/FII Holdings
Promoters held 70.2 per cent stake in the company as of June 30, 2020, while FIIs held 11.2 per cent, DIIs 8.1 per cent and public and others 10.5 per cent.
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