July 13, 2024

Motilal Oswal’s analysis report on Pidilite Industries

Pidilite (PIDI) delivered wholesome 10% quantity progress and in-line EBITDA in 3QFY24. The Client and B2B segments clocked strong double-digit quantity progress. Rural and small-town markets outpaced city markets. Worth progress (4%) was impacted by value cuts. n GM expanded 1,100bp YoY/150bps QoQ to 53% owing to benign uncooked materials costs. VAM continued to say no to ~USD900/t from USD2,000/t in 3QFY23. n PIDI stays dedicated to stepping up investments in model and buyer engagement. EBITDA margin expanded by 700bp YoY/150bp QoQ to 23.7% (est. 23.2%). We mannequin 23% EBITDA margin for FY25/FY26. n The lending enterprise pilot is underway and can be launched in a southern Indian metropolis in Feb’24. A devoted group is established to work on this system at arm’s size. The INR1b dedication over two years stays unchanged, relying on the pilot’s success.

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PIDI stands out for its market-leading place within the adhesives market with a robust model and a strong stability sheet. Nonetheless, we consider the present valuation limits the upside potential. We reiterate our Impartial ranking on the inventory with a TP of INR2,650 (premised on 55x Dec’25 EPS).

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Pidilite Industries – 2612024 – moti