Pidilite Industries shares jump 9% after Q3 results; Nuvama sees 35% upside potential

Shares of Pidilite Industries Ltd surged as much as 9 per cent during the trading session on Thursday, following the company's strong performance in the December 2024 quarter. Brokerage firms, on the other hand, remain mostly positive on the stock as of now, which might be revised after the earnings call later today.

Pidilite Industries reported consolidated net profit of Rs 557 crore for the October-December 2024 quarter, a 9 per cent increase over the same quarter last year. The leading adhesives and construction chemicals maker's revenue from operations for the third quarter stood at Rs 3,368.91 crore, up about 8 per cent in the same period year ago.

Gross margins improved by 100 basis points year on year, mainly due to benign input prices, while the Ebitda margins came in at 25.1 per cent in Q3FY24. Net sales grew 9 per cent to Rs 3,357 crore (excluding Pidilite USA and Pulvitec Brazil) over the same quarter last year.

Following the Q3 results, shares of Pidilite Industries rose 8.77 per cent to Rs 2,996 on Thursday, with its total market capitalization hitting Rs 1.51 lakh crore mark. However, the stock had settled at Rs 2,754.20 in the previous trading session.

Pidilite delivered decent performance in Q3FY25 revenue and Ebitda in-line with estimates. Overall volume growth stood at 9.7 per cent YoY. C&B volumes grew 7.3 per cent YoY while the B2B segment maintained its growth trajectory, with volumes surging 21.7 per cent YoY fuelled by industrial and project verticals, said Nuvama Institutional Equities.

"Gross margin expanded 145 bps YoY whereas Ebitda margin remained flat YoY. Input costs remained benign during the quarter. We will revisit our estimates and target price post the earnings conference call," Nuvama added, maintaining a 'buy' rating on the stock with a target price of Rs 3,735 on the stock, which suggests an upside potential of more than 35 per cent in the stock.

Motilal Oswal Financial Services said that domestic subsidiaries delivered double-digit revenue growth with improvement in Ebitda margin. "Owing to global economic uncertainty, inflation, and political instability in some countries, the company’s international subsidiaries (excluding Pidilite USA and Pulvitec Brazil) reported modest sales growth," it said.

Pidilite remains cautiously optimistic about improved demand from a good monsoon and increased construction activities. Its focus remains on driving profitable, volume-led growth through brand, supply chain, and people investments, said Motilal Oswal with a 'neutral' rating on the stock.