Shares of Fevicol maker Pidilite Industries Ltd surged over 6% amid a weak market today after international brokerage Goldman Sachs upgraded the stock to a ‘buy’ from ‘sell’. Pidilite Industries’ target price was raised to Rs 2725 from the previous Rs 2350.
Subsequently, the Pidilite Industries stock rose 6.30% to Rs 2460 in early deals amid a weak market. Market capitalisation of the firm climbed to Rs 1.24 lakh crore. Total 0.53 lakh shares changed hands amounting to a turnover of Rs 12.76 crore.
The stock hit a 52-week low of Rs 2250.85 on February 24, 2023 and a 52 week high of Rs 2796.15 on December 7, 2022.
Pidilite shares have a beta of 0.6, indicating very low volatility in a year.
In terms of technicals, the relative strength index (RSI) of the stock stands at 30.6, signaling it's trading neither in the overbought or oversold zone. The stock is trading higher than the 5 day, 20 day, 30 day but lower than the 50 day, 100 day , 150 day and 200 day moving averages.
The stock has fallen 3 percent in 2023 and lost 5% in a year.
Goldman Sachs sees new growth drivers emerging for the firm and believes that the earnings downgrade cycle is behind for the fevicol maker.
The brokerage raised its earnings estimates for FY25/26 by 4/8%, respectively. It expects a strong recovery in margins of the adhesives maker from 16.7% in FY23 to 23.1% in FY26E.
However, a slowdown in construction of houses and a sharp rise in input costs could adversely impact EBITDA margins of the company, Goldman Sachs said.
Pidilite Industries reported a 32 per cent rise in its consolidated year-on-year (YoY) net profit at Rs 474 crore in the first quarter of this fiscal. Net sales climbed 6% to Rs 3,264 crore over the same quarter last year. EBITDA grew 34 per cent to Rs 707 crore in the June 2023 quarter. On a standalone basis, profit after tax (PAT) rose 40 per cent YoY to Rs 468 crore. Net sales climbed 6 per cent YoY.
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