Broker’s call: Pidilite (Add)

Target: ₹3,470

CMP: ₹2,734.30

Pidilite Industries hosted its Analyst Day on March 18.

The key takeaways are:

Pidilite’s rural-urban or rurban journey started in 2001 (in sub-50k population towns), and from 2016 the focus also moved towards 50k-200k population towns. Since 2019, rurban markets had become a strong pillar of growth, growing faster than urban markets. Initiatives to get closer to the market supported growth. Pidilite also tailored its product offerings to suit the requirements of rural markets to drive consistent growth.

Pidilite has launched new categories like external renders under the Unofin brand (via a joint venture with Grupo Puma) which serve as replacement for plaster, putty, primer & paints. The target customers are EPC contractors and architects for this segment.

Management reiterated that core categories (Fevicol, Fevikwik, M-Seal, Fevicryl, etc.) are expected to grow at 1-2x of India’s GDP, while growth categories are expected to grow at 3.5x GDP. Within pioneer categories, some verticals have moved to the growth category.

While the near-term demand environment remains challenging, Pidilite’s focus on distribution expansion, innovation and projects business keeps medium-term drivers intact. We maintain our Add rating on the stock.