Priyanka Tiwari
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Pidilite Industries (PIDI) recently hosted an analyst day, emphasizing its market dominance in adhesives and sealants. With a 70% market share in products like Fevicol and M-Seal, PIDI continues to lead the market while strategically expanding across various segments.
The company has structured its portfolio into three distinct segments: Core, Growth, and Pioneer. This strategic approach aims to drive growth and maintain a balanced, future-ready business model.
Segment Breakdown and Strategic Focus
Core Segment:
The Core segment, which includes established brands like Fevicol, is expected to grow at 1-2x GDP growth rates. This segment focuses on premiumization and innovation to sustain market leadership.
Growth Segment:
The Growth segment, including brands like Dr. Fixit and Roff, targets categories with potential for 2-4x GDP growth. These high-potential categories play a key role in expanding the company’s market presence.
Pioneer Segment:
The Pioneer segment, featuring brands like Unofin and Haisha, aims to achieve INR 1 billion in revenue within three years of launch, indicating the company's forward-thinking expansion strategy.
Shift in Revenue Contribution
A decade ago, approximately 80% of PIDI's revenue came from core categories like adhesives. Today, the core categories contribute 52%, while growth categories now contribute 48%. The company’s goal is to maintain a balanced 50:50 mix, ensuring both diversified growth and a sustainable business model for the future.
Revenue and EBITDA Outlook
Looking ahead, Pidilite Industries is modeling a revenue CAGR of 13% and EBITDA CAGR of 14% for FY25-27E, reflecting its continued expansion and strategic growth.
Stock Outlook and Rating
Despite the company's strong growth prospects, the stock is currently valued highly. Pidilite Industries is being evaluated at a 55x Mar'27E EPS, leading to a Neutral rating on the stock with a target price of INR 2950. Given the rich valuation, the company’s long-term growth potential is acknowledged, but the current price levels may limit further upside in the short term.
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