Accumulate Pidilite Industries, target Rs 1,175: Prabhudas Lilladher

Prabhudas Lilladher has an accumulate call on Pidilite Industries with a target price of Rs 1,175.

The current market price of Pidilite Industries is Rs 1,164.85.

Time period given by the brokerage is one year when Pidilite Industries price can reach the defined target.


View of the brokerage on the company:
Pidilite is well placed to capitalize on the growth opportunity in adhesive and sealants given strong brand like Fevicol and extension of Fevicol to new applications in line with construction trends.

Emerging businesses like Nina, Percept (waterproofing services), ICA (wood coatings), Dr. Fixit (waterproofing), Roff (tiling solutions) and CIPY JV’s (floor coatings) will emerge as key growth drivers in coming years.

Rising VAM, packaging and depreciating rupee is near-term concern; however, nearly 3 per cent price increase in select products will prevent any meaningful margin compression.

Bangladesh and Sri Lanka are likely to be major growth drivers in IBD.

We estimate 14.6 per cent sales and 16.3 per cent PAT CAGR over FY18-20.

We value the stock at 43xSept20 EPS and arrive at SOTP based target price of Rs 1,175. Retain Accumulate.