#Stockcentricthreads - #Pidilite Analysis and valuations. This is my thread on business analysis, #stockvaluation of a flagship Indian business.
Disclaimer - I'm a fan of this brand - From advertising to its management philosophy and vision - Quality is nondebatable!
Disclaimer - I'm a fan of this brand - From advertising to its management philosophy and vision - Quality is nondebatable!
Let's look at the business first to see the segments contribution to revenue and brands established
Consumer bazaar's Adhesives & Sealants contribute to 56% of revenue - MSeal & Fevicol. The 2 legendary brands
Consumer bazaar's Adhesives & Sealants contribute to 56% of revenue - MSeal & Fevicol. The 2 legendary brands
A recurring, repeating product which is a favorite among the consumers & carpenters of India - No 2 ways on growth ahead! So let's see how much of future growth has the market embedded in the stock CMP. I use forward EPS model for this
Assuming 20% RoR on my investment at current CMP of 1250/-, Lets see whats the future in 2025. Let's assume PE of 50. 5 yrs historical median PE has been 52.6 and I expect this to continue.
As per the above table, EPS frm current 23/- has to grow to 62/- which means with future PE of 50 the stock will trade at Rs.3110/- from current 1250/- levels (Returns of 20% annually) For this the EPS shud grow by 22% CAGR while it has grown at 18.1% in last 5 yrs.
The recent correction has ensured the growth expectation built in price is reasonable. This business is still very much in a growth phase so a DCF really would not do justice to the growth and will throw up a result of being extremely overvalued so I'm not doing DCF for this!
