Citi has initiated a BUY on Pidilite Industries with the following recommendation,
We initiate at Buy on Pidilite Industries, a pioneer in consumer and specialty chemicals used in home construction and maintenance in India. Although the stock is up ~60% YTD, we expect a further re-rating as earnings ramp up to a ~25% CAGR on rising demand from India’s growing middle-class and as margins widen on falling input costs
Citi has set a Target price of Rs 610 which is highly expensive in our view based on the forward P/E.
Citi is expected to report an EPS of Rs 11 and Rs 13.5 for FY 2015 & 2016 respectively. The stock is expensive currently at Rs 488 in our view. Existing Investors can HOLD and new investors can enter the stock on correction.
