Pidilite Industries Receives Buy Recommendation from Prabhudas Lilladher with Target Price of Rs 1729

Prabhudas Lilladher Raises EPS Estimates for Pidilite Industries

In a recent research report, Prabhudas Lilladher has increased its earnings per share (EPS) estimates for Pidilite Industries (PIDI) for fiscal years 2027 and 2028 by 3.8% and 3.7%, respectively. This upward revision is led by several key factors, including a healthy demand outlook for the company's construction and building (C&B) segment, driven by a recovery in discretionary spending. Additionally, PIDI has taken cumulative price hikes of around 10-12% in April and May, and aims to achieve a 100 basis points (bps) expansion in a steady environment, primarily through higher growth in pioneer and growth categories.

PIDI has posted strong momentum, with a robust 15.4% volume growth (UVG) in the C&B segment during the fourth quarter. The company's EBITDA margin expanded by 182 basis points year-over-year (YoY), supported by healthy gross margins (GMs) of 56.5%. However, the research report notes that the strong fourth-quarter performance may not sustain in the coming quarters, given cyclic peaks in margins, volatile input costs, and the waning impact of channel stocking in the fourth quarter of 2026.

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PIDI is well-positioned to sustain growth, driven by continuous innovations, strategic tie-ups to introduce technologically advanced products, and 2-4x growth in pioneer and growth categories, which account for 45% of sales. However, the near-term margin outlook remains uncertain due to volatile crude prices amidst ongoing geopolitical tensions and investments in new categories.

Outlook and Recommendations

The research report estimates a 12% EPS compound annual growth rate (CAGR) over fiscal years 2026-2028 and assigns a DCF-based target price of Rs1,729. Despite this, the report expects steady but back-ended returns, given rich valuations of 47.9 times fiscal year 2028. Prabhudas Lilladher has retained its BUY recommendation for Pidilite Industries.