| Date | Stock | Entry Price | Mode |
|---|---|---|---|
| 25 May 2026 | Pidilite Industries | ₹1,500.90 | Mode 2 — Quality Long Wait |
Why Now
Profits doubled. Stock halved. Moat intact. PE below decade median. That’s the whole thesis.
Between FY22 and FY26, Pidilite grew PAT from ₹1,207 crore to ₹2,449 crore — a 103% increase. In the same period, the stock fell from ₹3,277 to ₹1,456. Pure PE compression. Not business deterioration.
The market trusted Pidilite too much for too long. At peak, it traded at 110x earnings. That premium was unsustainable. What’s happened since isn’t the business breaking — it’s the valuation normalising.
The Business
Fevicol is a verb. Nobody says “apply adhesive.” That kind of brand ownership doesn’t get built — it gets inherited across decades of consistent execution.
Capital light — capex of just ₹71 crore on ₹14,600 crore revenue. FCF margin at 22%. Debt free. Operating cashflow growing even in difficult years. Margins at multi-year high of 23.4%. Volume growth at 15%.
This is not a business in trouble. This is a business the market temporarily stopped loving.
Why Mode 2 — Not Mode 1
There’s no government backstop here. No yield floor. No sovereign guarantee.
Pidilite is not a range play — I’m not waiting for a bounce to ₹1,800 and exiting. Mode 2 is for quality businesses temporarily mispriced by the market. Growth intact. Moat intact. PE at multi-year lows.
Hold until the business tells you to leave. Not until a price target is hit.
The Range
| Metric | Value |
|---|---|
| 10 year median PE | 68x |
| 5 year average PE | 96x |
| Current PE | ~67x |
| Forward PE | ~59x |
| 52W High | ₹1,574 |
| 52W Low | ₹1,259 |
| Entry — Lot 1 | ₹1,500.90 |
| Averaging level | ₹1,259 (52W low) |
By Pidilite’s own history, that starts looking reasonable to me.
The Risk
This is not classically cheap. At 67x, there’s no margin of safety in the Graham sense. If India’s real estate and construction cycle slows — Fevicol demand slows. Raw material VAM can spike. PE could compress further to 45-50x.
At ₹1,259 — the 52W low — that risk would be more than priced in. At ₹1,500, I’m taking a calculated bet on PE stabilisation meeting continued earnings growth.
Eyes open on that.
This thesis breaks if growth meaningfully weakens across multiple quarters, FCF margins deteriorate structurally, or a credible challenger weakens the Fevicol moat.
What I’m Watching
- Quarterly PAT growth — must stay on track
- Volume growth — 15% needs to hold
- VAM prices — key raw material risk
- Real estate and construction sentiment — demand driver
- Asian Paints or any new adhesive challenger gaining share
What Would Make Me Exit
This is Mode 2 — I exit when the business tells me to, not when the price falls.
- Business deteriorates — margin collapse, volume decline, debt appearing
- PE reverts toward historical mean and price reflects full value
- Something structurally breaks in the moat
This isn’t something I’m planning to exit quickly unless the business changes materially.
Current Status
Lot 1 active at ₹1,500.90. Averaging level at ₹1,259 — 52W low. Small position by design — no sovereign floor, no yield cushion. Mode 2 rules apply.
Q4 FY26 results confirmed thesis strongly. Revenue +14% YoY. PAT +36.6%. Volume growth 15.3%. EBITDA margin expanded to 23.4%. Final dividend ₹11.5 per share. FCF intact. Moat holding.
This isn’t something I’m planning to exit quickly unless the business changes materially.
This entry will be updated when something material changes — results, averaging, exit or thesis break. Not before.
Journal Timeline
| Date | Event | Status |
|---|---|---|
| 25 May 2026 | Initial entry — Lot 1 at ₹1,500.90. PE thesis. Accumulation begins. | Active |
| 07 May 2026 | Q4 FY26 results — Revenue +14% YoY. PAT +36.6% to ₹584 crore. Volume growth 15.3%. EBITDA margin 23.4% — up 280bps YoY. Final dividend ₹11.5 per share. Growth intact. Thesis strongly confirmed. | Reviewed |
This timeline updates when something material changes — results, averaging, exit or thesis break. Not before.
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About the Author
Jonathan — Endurance athlete. Investor by discipline. I document real trades in real time — entry prices, thesis, risks and honest updates. No tips. No calls. Just disciplined thinking, publicly archived.
All views expressed are personal. This is not investment advice. Please consult a SEBI registered advisor before making investment decisions.