Pidilite has given returns of more than 20% over a 12-month period outperforming the Nifty50 by 5.6%. The latter has given 14.6% during this period according to Trendlyne data.
Despite the upheavals in the markets, the stock has been low on volatility and has traded with a 1-year beta of 0.58.
Pidilite is a leading manufacturer of adhesives and sealants, construction chemicals, crafts products, DIY products, and polymer emulsions in India. The maker of Fevicol also boasts of popular products like M-Seal, Fevikwik, Fevistik, Roff and Dr. Fixit Fevicryl.
Technical View
Rajesh Palviya of Axis Securities: Buy | Target: Rs 2,800 | Upside: +9%
Pidilite Industries shares have consolidated broadly between Rs 2,800 – Rs 2,000 levels since the past couple of years, displaying short term and medium term sideways trends, Rajesh Palviya, Senior Vice President – Technical and Derivatives Research, Axis Securities said.
The major long-term trend remains very strong and bullish and the counter has recaptured its 20, 50, 100 and 200-day SMAs [Simple Moving Average] and rebounded sharply, indicating a solid comeback of bulls, Palviya said adding that rising price and rising volumes reconfirm increased participation near the support zone.
On the monthly time frame, the strength indicator RSI still signals negative divergence, which remains a cause of concern. The short-term support zone is around Rs 2,400 – 2,300 levels, whereas the supply zones are about Rs 2,700 – 2,800.
Fundamental View
Sharekhan: Hold | Target: Rs 2,600 | Upside: 5%
Sharekhan has a ‘Buy’ rating on the Pidilite Industries stock for a price target of Rs 2,600. The stock was recommended at a price of Rs 2,471 and offers a 5% upside from this level.
The management is confident of improving growth prospects in FY2024, led by higher demand from the home improvement segment and rising demand from real estate and construction activities in urban markets and recovery in demand in rural and semi-urban markets.
Strong brand portfolio and wider reach will aid market share gains in the construction chemical segment (especially in the waterproofing space) from unorganised players, Sharekhan said. Entry into the decorative paints category is to complete the portfolio and to showcase itself as a complete home improvement company, the brokerage said further.
Pidilite’s Q4FY2023 performance was soft with 7.3% year-on-year revenue growth while EBITDA margin improved by 108 bps YoY to 17.1%, which was below Sharekhan’s expectations. The net profit grew by 12.4% YoY to Rs 285.9 crore.
ET CONTRIBUTORSKey Risks
Sustained inflation in raw material prices (including VAM) and a slowdown in the consumer demand will act as a risk to its earnings estimates.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)
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