Despite muted volume growth in Q2, strong margins a cushion for Pidilite

Cheaper VAM to help post Ebitda margin of 20-22%, but pricey valuation leaves no room to disappoint investors

Despite muted volume growth in the September quarter, the stock of Pidilite Industries has gained 6.4 per cent over the last month, outperforming the broader market indices like the S&P BSE Sensex, which is up 1.1 per cent during the period. A sustained strong margin outlook with supportive raw material inflation is keeping investor sentiments intact. In fact, stock valuation has remained high and is currently at par with that of companies like Asian Paints at around 50 times FY21 estimated earnings.

The southward trend in prices of key raw material, i.e. vinyl acetate monomer (VAM), has continued even in