Motilal Oswal is bullish on Pidilite Industries has recommended buy rating on the stock with a target price of Rs 1280 in its research report dated January 24, 2019.
Motilal Oswal's research report on Pidilite Industries
Pidilite's (PIDI) consolidated net sales grew 19.8% YoY to INR 18.5b (est. INR16.8b) in 3QFY19. Standalone Consumer & Bazaar segment revenues were up 17.3% YoY to INR13.4b with underlying sales volume and mix growth of 13%, while EBIT margins contracted 500bp to 26.9%. Overall standalone underlying sales volumes and mix grew 11% YoY. Consolidated Consumer & Bazaar segment revenues were up 22.1% YoY to INR16b with EBIT margins down ~570bp YoY to 22.4%. Industrial segment grew by 6% to INR2.6b with margins down 510bp to 11.8%.
Outlook
Despite rich near term valuations, given the tremendous structural opportunity leading to elevated earnings growth beyond FY19, we continue to maintain Buy rating with a target price of INR1,280, valuing the stock at 50x December 2020 EPS, 10% premium to 3-year average.
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