Nuvama Institutional Equities has reaffirmed its ‘Buy’ rating for Pidilite Industries, setting an ambitious target price of ₹3,660 following insights gathered from the company’s recent analyst meeting. The brokerage is optimistic about Pidilite’s strategic focus on expanding into new markets and capitalizing on growth opportunities within its product segments, particularly in tile adhesives and waterproofing solutions.

Promising Growth in Waterproofing Segment

Nuvama’s analysis highlights the Dr. Fixit waterproofing segment as a key area for growth, projecting an impressive 50% increase in this market. Currently, 15% of new construction projects utilize Dr. Fixit products, while the brand captures 20% of the small repair and proactive renovation market. This significant room for growth suggests that Pidilite is well-positioned to enhance its market share in the coming years.

Expanding Opportunities in Tile Adhesives

The outlook for tile adhesives also appears bright, with Nuvama noting that only 25% of consumers currently use adhesives for tile installation. The Roff brand is expected to become a major player in this space, which has a total market size estimated between ₹2,500-₹3,000 crore. Currently, penetration in this category stands at only 18-20%, as many still rely on traditional cement. Pidilite is proactively expanding its capabilities in tile adhesive, marble finishing, and grouting, increasing plant capacity for Roff products to ensure proximity to market demand. With the shift towards tile adhesives—due to their superior bonding properties—Pidilite is poised to capture a larger share of this evolving market.

Global Expansion on the Horizon

Pidilite Industries is also advancing its international strategy, with plans to enhance its presence in Saudi Arabia and other emerging markets. The company operates in over 70 countries through its seven international subsidiaries. Nuvama points out that Pidilite tailors its offerings based on local market requirements, either leveraging existing products from India or adapting them to fit regional needs. This strategy not only broadens their reach but also aligns with their goal of penetrating markets that share similarities with India.

Strong Leadership Driving Growth

Nuvama expresses confidence in Pidilite’s top-tier leadership, noting the company’s commitment to exploring new opportunities. The brokerage highlighted the recent appointments of Mr. Sudhanshu Vats as Managing Director and Mr. Kavinder Singh as Joint Managing Director as pivotal for driving growth. “Pidilite Industries is focused on addressing market gaps with a robust team at the CXO level,” remarked Nuvama, reinforcing the belief that the company is a powerful compounding machine for investors.

Stock Performance Insights

As of Wednesday, Pidilite Industries’ shares experienced a slight increase of 1%, trading at ₹2,759. Despite this uptick, the stock has shown minimal movement over the past week, with a 1% decline over the last month and a 15% drop over the past six months. Furthermore, the stock’s value has decreased by 5% over the past year, reflecting a challenging period for the adhesive industry.

In summary, Nuvama’s bullish stance on Pidilite Industries underscores the company’s strategic initiatives and growth potential across multiple segments. As Pidilite continues to innovate and expand both domestically and internationally, it remains a compelling option for investors looking to capitalize on the growing demand for construction and adhesive solutions.