PIDILITIND - Investment Analysis: Buy Signal or Bull Trap?
Back to ListInvestment Rating: 3.8
| Stock Code | PIDILITIND | Market Cap | 1,45,088 Cr. | Current Price | 1,428 ₹ | High / Low | 1,575 ₹ |
| Stock P/E | 65.0 | Book Value | 92.8 ₹ | Dividend Yield | 0.70 % | ROCE | 30.5 % |
| ROE | 23.2 % | Face Value | 1.00 ₹ | DMA 50 | 1,464 ₹ | DMA 200 | 1,484 ₹ |
| Chg in FII Hold | -0.07 % | Chg in DII Hold | 0.06 % | PAT Qtr | 586 Cr. | PAT Prev Qtr | 650 Cr. |
| RSI | 41.8 | MACD | -13.8 | Volume | 15,00,878 | Avg Vol 1Wk | 9,84,428 |
| Low price | 1,310 ₹ | High price | 1,575 ₹ | PEG Ratio | 3.19 | Debt to equity | 0.03 |
| 52w Index | 44.4 % | Qtr Profit Var | 8.10 % | EPS | 21.8 ₹ | Industry PE | 27.0 |
📊 Analysis: Pidilite Industries (PIDILITIND) trades at ₹1,428 with a high P/E of 65.0 compared to the industry average of 27.0, indicating overvaluation. Fundamentals are strong with ROE at 23.2% and ROCE at 30.5%, reflecting efficient capital use. EPS of ₹21.8 is modest, and dividend yield of 0.70% provides limited income support. Debt-to-equity is very low at 0.03, showing financial stability. However, PEG ratio of 3.19 suggests expensive valuation relative to growth. Quarterly PAT declined from ₹650 Cr. to ₹586 Cr., showing earnings pressure. Technicals are weak (RSI 41.8, MACD negative, trading below DMA 50 & 200). Overall, Pidilite is a fundamentally strong company but currently overvalued, making dips more attractive for entry.
💡 Entry Price Zone: Ideal accumulation range is ₹1,310–₹1,380, closer to the 52-week low (₹1,310). Current price is slightly above fair value zone, so fresh entry should be on dips.
📈 Exit / Holding Strategy: For existing holders, Pidilite is a strong long-term compounder given its brand strength and capital efficiency. Recommended holding period: 5+ years to benefit from compounding. Exit strategy: partial profit booking near ₹1,550–₹1,575 if valuations stretch, while retaining core holdings for sustained growth.
Positive
- Strong ROE (23.2%) and ROCE (30.5%) show efficient capital utilization.
- Debt-to-equity ratio of 0.03 indicates financial stability.
- EPS of ₹21.8 supports earnings base.
- DII holdings increased (+0.06%), showing domestic institutional support.
Limitation
- High P/E (65.0) compared to industry average (27.0), indicating overvaluation.
- PEG ratio of 3.19 suggests expensive valuation relative to growth.
- Dividend yield modest at 0.70%, limiting income returns.
- Stock trading below DMA 50 (1,464) and DMA 200 (1,484), showing weak technical trend.
Company Negative News
- Quarterly PAT declined from ₹650 Cr. to ₹586 Cr.
- FII holdings reduced (-0.07%), showing slight foreign investor caution.
- MACD negative (-13.8), indicating bearish momentum.
Company Positive News
- DII holdings increased (+0.06%), reflecting domestic institutional confidence.
- Quarterly profit variation (+8.10%) shows some resilience despite decline.
Industry
- Industry PE at 27.0, much lower than Pidilite’s valuation, suggesting peers may offer better value.
- Adhesives and chemicals sector has strong long-term demand potential driven by construction and consumer markets.
Conclusion
✅ Pidilite Industries is a fundamentally strong, debt-free company with efficient capital metrics but currently overvalued. Ideal entry is ₹1,310–₹1,380. Long-term investors can hold for 5+ years to benefit from compounding. Existing holders may book profits near ₹1,550–₹1,575 while retaining core positions for sustained growth.