Pidilite Industries Q2 Results Review - Volume Growth To Remain High: Dolat Capital

Dolat Capital Report

Pidilite Industries Ltd.’s Q2 FY25 revenue was in line our estimates. Revenue grew by 5.2% representing a five-year CAGR of 12.4%. Consumer and Bazaar segment posted 2.9% growth, while B2B segment grew by 14.3%.

Additionally, domestic business reported revenue growth of 7.1% YoY with high-single digit UVG of ~8%.

As VAM prices moderated, gross margin improved 300 bps YoY. We believe that with current VAM prices, margins would remain in the range of 20-24%.

We have maintained our FY25/26E EPS estimates at Rs. 42.0/48.1 as Q2 performance was in line with estimate. Further, we have introduced FY27E EPS at Rs 53.5.

In the long run, the company’s strong brand portfolio and wide distribution reach will help accelerate growth. With high growth potential and leadership, Pidilite deserves high valuations. We upwards revise our target price to Rs 3,480 (Rs 3,392 earlier) valuing the stock at 65 times FY27E EPS and maintain ‘Accumulate’ rating on the stock. Buy on dips.

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