Why Is Nuvama Bullish on Pidilite as a Long-Term Compounding Story?
Pidilite Industries, the name synonymous with Fevicol, is one of India’s most iconic consumer and specialty chemical companies. Known for its adhesives, construction chemicals, and art materials, Pidilite has built a strong moat with a wide distribution network, deep brand recall, and continued focus on innovation. From household products to industrial adhesives, Pidilite enjoys category leadership in most of its business lines.
Nuvama’s Call on Pidilite
Nuvama Institutional Equities has reiterated its BUY rating on Pidilite Industries with a target price of ₹3,785. The brokerage highlights several growth levers that make Pidilite a reliable long-term investment, particularly in the adhesives and construction chemicals space.
- Tile adhesives seen as a high-growth segment given low penetration and strong product portfolio.
- Haisha Paints segment improving steadily QoQ and MoM, though still slightly below early expectations.
- Management confident of sustaining double-digit revenue and volume growth.
- EBITDA margin expected to remain at the higher end of the 20–24% range.
- Focus on category creation in underpenetrated rural and semi-urban markets.
Tile Adhesives: A Hidden Growth Engine
India’s tile adhesive market remains largely underpenetrated compared to developed economies where usage is standard practice. Pidilite’s strong brand presence, distribution reach, and consumer education initiatives are positioning it as the leading player in this segment. With urban housing growth, rising disposable incomes, and increasing preference for quality construction, this category has potential to deliver sustained double-digit growth.
Haisha Paints – Steady Progress
Pidilite’s entry into paints through Haisha Paints is progressing well, showing quarter-on-quarter and month-on-month improvement. Though current performance is slightly below the company’s original expectations, management believes in the long-term potential of this segment. Paints, being a high-growth and brand-driven industry, will provide Pidilite another pillar of strength in the years to come.
- India’s paint industry is projected to grow at a healthy pace driven by urbanization and housing demand.
- Pidilite’s strong consumer brand association can help it capture market share despite being a relatively new entrant.
- Long-term synergies with adhesives and construction chemicals will strengthen positioning.
Margins and Financial Outlook
Management commentary suggests that Pidilite expects EBITDA margins to sustain at the higher end of the 20–24% range. Stable raw material costs and operating leverage are expected to support profitability. Combined with strong revenue visibility, these margins reinforce the company’s long-term compounding nature.
- Consistent double-digit revenue growth forecast.
- Volume growth aligning with market share expansion.
- Strong cash flows supporting ongoing capex and brand-building initiatives.
Focus on Category Creation
Beyond existing businesses, Pidilite continues to innovate by creating new categories in underpenetrated markets. Its rural and semi-urban outreach programs focus on educating carpenters, masons, and consumers about the benefits of modern adhesives and chemicals. This strategy not only expands the market but also strengthens brand loyalty.
Risks to Watch Out For
Despite its strengths, investors should remain aware of potential risks. These include volatility in crude-linked raw materials, rising competition in the paints segment, and slower-than-expected adoption of tile adhesives in rural markets. Regulatory and environmental compliance will also be crucial for sustainable long-term growth.
Investor Takeaway
Pidilite Industries continues to be a trusted consumer brand with significant growth potential in adhesives, construction chemicals, and paints. With Nuvama reaffirming its bullish stance, the company remains a classic long-term compounding story. For investors seeking steady compounding returns, Pidilite offers resilience, brand equity, and innovation-driven growth. However, prudent monitoring of input costs and competition is advisable.
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SEBI Disclaimer: The information provided in this post is for informational purposes only and should not be construed as investment advice. Readers must perform their own due diligence and consult a registered investment advisor before making any investment decisions. The views expressed are general in nature and may not suit individual investment objectives or financial situations.
