Emkay Global Financial Services has downgraded Pidilite Industries to 'Accumulate' with target price of Rs 580  in its report.

Commenting on the investment rationale, the stock broker said, ''Miss on Revenue and PAT, Revenues +5.3% yoy to Rs 10.4 billion, EBITDA margins improved 240bps yoy to 12.8% and APAT at Rs 806 million, up 10.2% yoy. Domestic volumes mutes to 3.1% yoy. Consumer & bazaar posts 5.5% volume growth; industrial decline by 1.6% impacted by pricing action and tepid demand. Expect demand sentiments to be muted in H1FY16, but expect pick up in second half.

Stable input prices with improving mix and pricing power to drive gross margin expansion and subsequently to flow to EBITDA margins. We factor 280bps gross margin expansion and 380bps EBITDA margins by FY17E.

Unfavorable base & weak demand sentiments could weigh performance in near term we have cut revenue estimates by 3%/5% and earnings by 8%/6% for FY16/FY17. While, we are positive on long term growth & brand prospects of Pidilite, given interim demand weakness, we downgrade stock to Accumulate with revised target price of Rs 580/share.''

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