Neutral on Pidilite Industries, target price Rs 1535: Motilal Oswal

Motilal Oswal has given a neutral rating to Pidilite Industries with a target price of Rs 1535. The share price moved up by 0.46 per cent from its previous close of Rs 1595.55. The stock’s last traded price is Rs 1602.95.

Pidilite Industries Ltd., incorporated in the year 1969, is a Large Cap company (having a market cap of Rs 81455.31 Crore) operating in Diversified sector.

Financials
For the quarter ended 30-09-2020, the company reported a Consolidated sales of Rs 1880.33 Crore, up 114.20 % from last quarter Sales of Rs 877.84 Crore and up 4.08 % from last year same quarter Sales of Rs 1806.58 Crore Company reported net profit after tax of Rs 355.83 Crore in latest quarter.

Investment Rationale
While the structural investment case remains intact, we do not turn constructive from a one-year perspective on account of (a) the company’s recent earnings track record, (b) lower RoCEs (in mid-20 levels) v/s consumer peers, and (c) valuations of 62.9x FY22E. It maintains Neutral with TP of INR1,535 (55x Sep’22E EPS).

Promoter/FII Holdings
Promoters held 70.2 per cent stake in the company as of Sept 30, 2020, while FIIs held 10.9 per cent, DIIs 8.7 per cent and public and others 10.2 per cent.