Pidilite valuations glued to volume recovery, analysts see uptick in demand

While there are growth levers, near-term volumes have remained under pressure

Despite subdued volume growth of 2.5 per cent in the March 2019 quarter (fourth quarter, or Q4) versus double-digit growth in the past, the stock of Pidilite Industries gained 12 per cent since May 14, when the Q4 numbers were announced.

Sturdy profitability outlook helped the stock. Pidilite owns popular adhesive brands such as Fevicol, Fevikwik, Dr. Fixit, among others. Recovery in volume growth is key for the stock, given its pricey valuation of 55-56x its 2019-20 (FY20) estimated earnings, which is at the higher end of the consumer pack.

The muted volume offtake in Q4 had hit its segments.