Pidilite Industries shares were trading firm after the company reported strong quarterly performance. The stock faced resistance and couldn't cross Rs 3,000 levels during the first hour of trade but was trading nearly 8.6 percent higher. In its Q3 results for the quarter ended December 31, 2024, Pidilite Industries posted a consolidated net profit of Rs 552.42 crore, reflecting a 9% year-on-year (YoY) increase compared to Rs 510.48 crore in the corresponding quarter of the previous year. The company’s revenue for the quarter rose by 7.6% YoY, reaching Rs 3,368.91 crore, up from Rs 3,129.99 crore.

The consumer and bazaar segment, which contributes approximately 80% of the company’s total revenue, recorded a 5.2% YoY growth, while the business-to-business (B2B) segment delivered a robust 19% increase. Pidilite’s earnings before interest, taxes, depreciation, and amortization (EBITDA) grew by 8% YoY, accompanied by a 9.7% rise in sales volumes.

The company expressed cautious optimism about future demand trends, attributing its outlook to favorable factors such as a good monsoon and increased construction activities, both of which are expected to drive growth in the coming quarters.

With a market capitalization of Rs. 1.52 lakh crore and a Price-to-Earnings (P/E) ratio of 79.58, the stock reflects premium valuation. Despite being below its 52-week high of Rs. 3,415, Pidilite has shown resilience, staying comfortably above its 52-week low of Rs. 2,488.10. TopNews Team delves into the stock’s performance, technical analysis, and competitive positioning while offering actionable insights for investors.

Stock Performance: Key Metrics

Pidilite’s high P/E ratio underscores investor confidence in its growth prospects, though its valuation demands consistent performance and earnings growth.

Technical Analysis: Candlestick Patterns

On the daily chart, Pidilite Industries has formed a Bullish Engulfing Pattern, with the current closing price surpassing the prior day’s high. This pattern suggests strong buying interest and signals the possibility of a bullish reversal.

Investors should watch for sustained upward movement, particularly if the stock breaches key resistance levels in the next few sessions.

Fibonacci Retracement Levels

Using the 52-week high (Rs. 3,415.00) and low (Rs. 2,488.10), the Fibonacci levels for Pidilite Industries are as follows:

Key Insight:
Pidilite is trading near the 38.2% retracement level (Rs. 2,866.30). A move above Rs. 2,951.55 (50% level) could signal further bullish momentum, while support exists near Rs. 2,708.68.

Support and Resistance Levels

Support: Rs. 2,800.95
Resistance: Rs. 2,993.80
Trading Strategy:

A breakout above Rs. 2,993.80 could target Rs. 3,036.80 and higher levels.
A breakdown below Rs. 2,800.95 might lead to a retest of the Fibonacci level at Rs. 2,708.68.

Analyst Recommendations

Motilal Oswal, in a recent report dated January 2025, rated Pidilite as a “Buy” with a target price of Rs. 3,200, citing robust demand in the construction chemicals segment.
HDFC Securities issued a “Hold” recommendation with a target of Rs. 3,050, noting high valuations but consistent earnings growth.

Actionable Insights and Investment Strategy

Short-Term Traders:

Monitor for a breakout above Rs. 2,993.80 to confirm bullish momentum.
Use Rs. 2,800.95 as a stop-loss to limit downside risk.
Long-Term Investors:

Pidilite’s leadership in adhesives and construction chemicals makes it a reliable growth stock. Accumulate on dips, targeting Rs. 3,200 over the next 12 months.
Risk Factors:

High input costs could pressure margins.
Elevated valuation (P/E of 79.58) limits room for error in earnings performance.