Pidilite Industries Q2 preview: Company to benefit from steep fall in VAM prices; PAT expected to rise 35% YoY

Pidilite Industries share price: Pidilite Industries, a leading company in adhesive, industrial and construction chemicals, and art materials, is expected to report decent results for the second quarter of the current fiscal (Q2 FY24). The company is slated to release its financial results for the July-September quarter today (November 8).

According to Zee Business Research, the company is expected to report a 35 per cent year-on-year (YoY) rise in its consolidated profit after tax (PAT) at Rs 449 crore as against Rs 332 crore logged in the corresponding quarter of the previous fiscal. Its revenue is expected to increase by 5 per cent YoY to Rs 3,173 crore. EBITDA, or earnings before interest, taxes, depreciation, and amortisation, is seen surging 34 per cent YoY to Rs 671 crore, while margins are pegged at 21 per cent as compared to 16.6 per cent in the year-ago period.

The company's domestic volume is expected to see 3–4 per cent growth. Further, the research desk notes that the company will benefit from the steep fall in the price of vinyl acetate monomer (VAM). Vinyl acetate polymer is one of the key chemical building blocks used to manufacture a variety of consumer and industrial products. The gross margins of Pidilite Industries are estimated to improve by 600–700 basis points (bps).

Key monitorables include demand and the company's outlook.

Goldman Sachs upgrades stock to 'Buy' from 'Sell'

Last week, shares of the Fevicol maker hit an all-time high after global brokerage firm Goldman Sachs upgraded the stock to "buy" from "sell." It has also revised the target price to Rs 2,725 from Rs 2,325 earlier.

The brokerage believes that the stock's earnings downgrade cycle is a thing of the past and that the company is poised for strong growth on the back of new products and paint segments. The company is continuously expanding its distribution network, Goldman Sachs notes. 

The brokerage has increased the company's earnings estimates for FY25/26 by 4 per cent / 8 per cent. It also expects a strong recovery in margins. It sees margins for FY26 at 23.1 per cent against 16.7 per cent seen in FY23. READ MORE

Pidilite Industries' share price 

The shares of the company have remained muted in the past 12 months as the stock has slipped around 7.5 per cent, thus underperforming the benchmark index Nifty50, which has risen over 6 per cent during the same period.