Pidilite Industries Ltd. reported 21% year-on-year revenue growth in the September quarter, but profitability remained under pressure from raw material inflation. While Citi lowered its target price and maintained a Sell rating, Goldman Sachs and HSBC retained their Buy recommendations, citing healthy volume growth and sustained demand momentum.
Pidilite Industries Q2 Results Highlights (Cons, YoY)
- Net Profit up 6.2% to Rs 615 crore vs Rs 579 crore
- Revenue up 20.9% to Rs 4,298 crore vs Rs 3,554 crore
- Ebitda up 3.2% at Rs 878 crore vs Rs 850 crore
- Ebitda Margin at 20.4% vs 23.9% year-on-year
Brokerage Views
Citi — Sell | Target Price: Rs 1,300
- Citi cut the target price to Rs 1,300 from Rs 1,550, reflecting concerns over profitability and valuations.
- Flagged the divergence between 21% revenue growth and modest expansion in Ebitda and net profit.
- Reduced FY27-29 earnings per share estimates by 2% to 5%.
- Maintained a cautious stance, citing expensive valuations.
Goldman Sachs — Buy | Target Price: Not Specified
- Retained its Buy rating despite weaker-than-expected operating performance.
- Highlighted 11.1% volume growth in the Consumer and Bazaar business and 9.2% growth in B2B segment.
- Pointed to the impact of raw material inflation, which weighed on gross margins.
- Flagged that Ebitda growth lagged revenue growth and missed estimates.
HSBC — Buy | Target Price: Rs 1,920
- Maintained its Buy rating, supported by underlying volume growth of 10.7%.
- Flagged an Ebitda miss of 5% to 7% against the brokerage's estimates, mainly due to high-cost inventories.
- Highlighted gross margin pressure of around 650 basis points year-on-year.
- Remained positive on management's confidence in sustaining growth momentum.
Also Read: Pidilite Industries Q2 Results: Net Profit Up 6.2%, Revenue Rise 21%
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