I O C L — Q2 FY26 earnings call

Call held 31 Oct 2025

Management summary

Pidilite delivered a strong Q2FY26 performance with robust domestic growth across both Consumer & Bazaar and B2B segments achieving double-digit underlying volume growth. The company strategically invested the benefit from lower input costs into advertising and sales promotion, increasing spending by 80% YoY to drive market share gains while maintaining EBITDA margins. Export challenges due to geopolitical factors remained a headwind.

Highlights

  • Strong standalone revenue of Rs 3,272 crores with value growth of 10.4%

  • Consumer and Bazaar segment achieved double-digit UVG of 10.4% after five quarters

  • B2B business delivered solid UVG of 9.9% with total standalone UVG at 10.3%

  • Gross margins expanded by 50 bps due to benign input prices, VAM down from $980 to $883

  • Significantly increased A&SP spending by 80% YoY in absolute terms

  • Maintained EBITDA margins at same level as Q2 FY25 despite higher marketing investments

  • Export business impacted by geopolitical uncertainty and tariffs in some markets

Key financials

2 periods

Headline

  • Consumer & Bazaar UVG
    10.4%
    YoY +25%
  • B2B Business UVG
    9.9%
    YoY +18%
  • Total Standalone UVG
    10.3%
    YoY +22%
  • Gross Margin Expansion
    50%
    YoY +50%
  • VAM Consumption Cost
    883 USD
    YoY -9.9%
  • A&SP Spending Growth
    80%
    YoY +80%

Q2FY26

  • Standalone Revenue
    ₹3,272 Cr
    YoY +10.4%

What they filed

Q1 FY27: revenue up 38.5%, net profit down 116.8% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue1,74,976 1,94,014 1,95,270 1,92,341 1,78,628 +2%2,05,157 +6%2,08,289 +7%2,66,407 +39%
EBITDA3,467 7,573 15,029 13,267 16,245 +369%22,745 +200%24,804 +65%4,062 −69%
Net profit-449 2,147 8,368 6,808 8,191 +1924%13,502 +529%15,176 +81%-1,141 −117%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Guidance & targets

Volume Growth

  • Consumer & Bazaar UVG Volume Growth · H2 FY26 · Medium confidence Sustained double-digit growth
    Consumer and Bazaar business went into double-digit UVG after five quarters

    — Sandeep Batra

Investment Strategy

  • A&SP Spending Investment Strategy · FY26 · High confidence Continued elevated levels
    step up our expenditure behind advertising and sales promotion, which in absolute terms was nearly 80% higher

    — Sandeep Batra

Margin Management

  • EBITDA Margins Margin Management · FY26 · Medium confidence Maintain healthy levels
    our EBITDA margins in this quarter were same as Q2 last year

    — Sandeep Batra

Risks & concerns

  • Export Market Volatility

    medium

    Export business declined in Q2 due to geopolitical uncertainty and tariffs in some markets

    Monitoring situation while focusing on domestic growth

  • Interest Rate Environment Impact

    low

    Non-operating income corrected due to interest rate resets and lower yields on treasury investments

    Expected impact being managed

  • Input Cost Volatility

    low

    Currently benefiting from benign input prices but commodity markets remain volatile

    Currently benign but requires monitoring

Q&A highlights

3 direct
Input Cost Benefits Utilization Direct
This expansion in margins was used to step up our expenditure behind advertising and sales promotion

Management clearly articulating strategic choice to invest input cost savings into growth rather than margin expansion

Asked by Multiple analysts

Consumer Segment Recovery Direct
Consumer and Bazaar business went into double-digit UVG after five quarters

Confirms successful turnaround in key consumer segment after period of slower growth

Asked by Multiple analysts

Export Market Challenges Direct
exports which was largely due to geopolitical uncertainty as well as tariffs in some markets and export business in the quarter did decline

Management acknowledging external headwinds affecting international operations

Asked by Multiple analysts

1 min read 4 chapters

Detailed narrative

Strong Domestic Recovery with Strategic Investment Focus

Pidilite delivered impressive Q2FY26 domestic performance with Consumer & Bazaar segment achieving double-digit UVG of 10.4% for the first time in five quarters, while B2B business maintained strong momentum at 9.9% UVG. The company strategically utilized the 50 bps gross margin expansion from benign input costs (VAM down from $980 to $883) to significantly increase advertising and sales promotion spending by 80% YoY, demonstrating commitment to long-term market share gains over short-term margin maximization.

Balanced Growth Strategy Across Segments

The company achieved total standalone UVG of 10.3% with value growth of 10.4%, showcasing healthy volume-value balance. Both key segments performed well - Consumer & Bazaar leading with double-digit growth after a five-quarter gap, and B2B business maintaining consistent high single-digit growth. This broad-based performance indicates successful execution of the company's strategy to drive growth across all customer segments while maintaining pricing discipline.

Export Challenges Amid Geopolitical Headwinds

Export business faced headwinds during the quarter, declining due to geopolitical uncertainty and tariffs in some international markets. This represents a manageable challenge given exports' relatively small contribution to total revenue (~5.3%), and management's focus remains on strengthening domestic market position where the company holds leadership positions across categories.

Margin Management and Investment Prioritization

Despite significant increase in A&SP spending by 150-160 basis points as percentage of sales, the company maintained EBITDA margins at Q2 FY25 levels through improved operational leverage across cost areas. Non-operating income was impacted by dividend payments and lower treasury yields, but the core operational performance remained strong with effective cost management enabling strategic marketing investments.

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