Pidilite Industries Limited — Q2 FY26 earnings call

Call held 31 Oct 2025

Management summary

Pidilite delivered a strong Q2 with double-digit UVG returning to the Consumer & Bazaar segment after 5 quarters. The company is benefiting from benign raw material costs (VAM below $900) which it is reinvesting into brand building (A&SP up 80% YoY, 150-160bps higher as % of sales). Construction sector growth brands and diversified portfolio driving outperformance vs FMCG peers. Urban demand recovery is visible alongside continuing rural strength. The Haisha paint initiative is progressing but hasn't hit internal milestones; management plans to fine-tune through FY26 before scaling.

Highlights

  • Standalone revenue of INR 3,272 crores with UVG of 10.3% and value growth of 10.4%

  • Consumer & Bazaar segment achieved double-digit UVG (10.4%) after 5 quarters; B2B UVG at 9.9%

  • Consolidated revenue of INR 3,540 crores, grew 9.8% YoY

  • EBITDA margins maintained at same level as Q2 last year despite 80% YoY increase in A&SP spend

  • Gross margins improved ~0.5% due to benign VAM prices ($883 vs $980 in Q2 LY)

  • Domestic B2B delivered mid-teens UVG; exports declined due to geopolitical uncertainty and tariffs

  • Haisha paint initiative growing sequentially; expanded from 5 Southern to Eastern geographies

  • EBITDA corridor of 20-24% maintained; operating at higher end (~24% in H1)

  • Cash balance ~INR 3,000 crores; actively evaluating M&A opportunities

Key financials

3 periods

Headline

  • Underlying Volume Growth (Standalone)
    10.3%
  • Consumer & Bazaar UVG
    10.4%
  • B2B UVG
    9.9%
  • Domestic B2B UVG
    15%
  • A&SP as % of Sales
    4.2%
  • Domestic Subsidiary Revenue Growth
    10.7%
  • Domestic Subsidiary EBITDA Growth
    22.6%
  • International Subsidiary Revenue Growth
    4.5%
  • Cash Balance
    ₹3,000 Cr

Q2

  • Standalone Revenue
    ₹3,272 Cr
    YoY +10.4%
  • Consolidated Revenue
    ₹3,540 Cr
    YoY +9.8%
  • VAM Consumption Rate
    883 $/ton
    YoY -9.9%

H1

  • EBITDA Margin
    24%

What they filed

Q1 FY27: revenue up 22.1%, net profit up 27.7% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue2,977 3,099 2,851 3,479 3,287 +10%3,436 +11%3,285 +15%4,249 +22%
EBITDA731 749 584 888 807 +10%840 +12%766 +31%1,121 +26%
Net profit542 534 446 650 586 +8%601 +13%547 +23%830 +28%
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

Margins

  • EBITDA Margin Corridor Margins · FY26 · High confidence 20-24%, operating at higher end
    We stay committed to our corridor of 20% to 24%. As you saw in first half, we are at the higher end of that corridor, about 24%.

    — Sudhanshu Vats

Growth

  • Double-digit UVG sustainability Growth · H2 FY26 · High confidence Double-digit UVG
    We've demonstrated that we've delivered double-digit underlying volume growth for some quarters, and we are confident that we can do it in the future.

    — Sudhanshu Vats

A&SP

  • Advertising & Sales Promotion A&SP · Ongoing · High confidence 3-5% of sales
    We maintain that our A&SP will be in the band of 3% to 5%. This quarter, we've come in at about 4.2%.

    — Sudhanshu Vats

CAPEX

  • Capital Expenditure CAPEX · Ongoing · High confidence 3-5% of sales
    We've always said that our capex will be anywhere between 3% to 5% of sales.

    — Sandeep Batra

Input Costs

  • VAM Price Outlook Input Costs · Next 6 months · High confidence Benign, below $900
    VAM is now below $900. What we are seeing for the next 3 to 6 months, specifically VAM we see for it to remain in that range and remain benign.

    — Sudhanshu Vats

Growth Framework

  • Core/Growth/Pioneer Categories Growth Framework · Ongoing · High confidence Core 1-2x GDP, Growth 2-4x GDP
    We say that we will deliver core between 1 to 2x of GDP, growth between 2 to 4x of GDP and pioneering categories are there.

    — Sudhanshu Vats

Risks & concerns

  • Export business decline from geopolitical uncertainty and tariffs

    medium

    Export decline dragged overall B2B UVG to 9.9% despite domestic mid-teens growth. Tariff resolution timing uncertain.

    Management acknowledged; domestic b2b compensating with mid-teens growth

  • Haisha paint initiative behind internal milestones

    medium

    Haven't achieved target market share in pilot markets. Need to be in top 3 by share. Model fine-tuning expected through H2 FY26 before expansion.

    Management continuing to fine-tune business model before scaling; confident but patient

  • Input cost cycle turning

    low

    VAM at $883 is benign but cycle has been favorable for extended period. China demand weakness keeping prices low. Beyond 6 months visibility is limited.

    Analyst benign for next 6 months; well-poised to manage cycles with pricing power

  • Q4 operating leverage negative

    low

    Q4 revenues structurally lower than other quarters, leading to negative operating leverage and potential margin compression.

    Management proactively flagged; structural seasonality

Q&A highlights

5 direct
Haisha Paint Initiative Progress Direct
We are growing sequentially. But have we got the business model fully right? If I was to be absolutely candid, the answer is no. It's still work in progress.

Paint entry is a major strategic bet. Management honest about not meeting internal milestones; expanding cautiously from Southern to Eastern geographies before scaling.

Asked by Tejash Shah (Avendus Spark)

Urban vs Rural Demand Recovery Direct
Rural still continues to do better than urban - this has been a trend over 5 years. But urban performance has been very good and is inching up.

Urban recovery emerging alongside sustained rural growth provides dual growth engine; construction sector brands driving urban performance.

Asked by Pranav Mehta (Equirus)

Electronics Adhesives (CollTech) Direct
Specifications to most customers is on, sales to a couple of customers has started. In immediate or medium-term, not going to be material to size of Pidilite. But in 3 to 5 years could be meaningful.

New category with long-term potential tied to India electronics manufacturing; early stage but commercial orders started.

Asked by Saurabh Kundan (Goldman Sachs)

Competitive Moats and Outperformance Direct
Very few companies focus on demand generation the way Pidilite does with our dual field force model. Second is the diversified portfolio giving better ability to maneuver.

Explains why Pidilite consistently outperforms FMCG peers - demand generation model plus portfolio diversification.

Asked by Tejash Shah (Avendus Spark)

Jowat Hot Melt Adhesives Progress Direct
We are seeing clear traction in joinery. Also doing well in advanced packaging and conversion. Mapping how to take it beyond woodworking.

Jowat partnership expanding beyond initial woodworking focus into industrial applications.

Asked by Bharat Sheth (Quest Investment)

1 min read 3 chapters

Detailed narrative

Double-Digit UVG Returns with Balanced Growth

Consumer & Bazaar segment returned to double-digit UVG (10.4%) after 5 quarters. Growth driven by construction sector brands (Dr. Fixit, Roff delivering at outer end of 2-4x GDP band). B2B domestic delivered mid-teens UVG offset by export weakness. Rural growth continues to outpace urban (trend of 16-20 quarters) but urban is visibly recovering. No pricing actions taken - all growth is volume-led as input costs are benign.

Margin Reinvestment Strategy

Benign VAM prices ($883 vs $980 YoY) expanded gross margins by ~50bps. This was strategically deployed into A&SP (80% increase YoY, 150-160bps as % of sales). Operating leverage improvements offset remaining gap, keeping EBITDA flat YoY. H1 EBITDA at ~24%, top of 20-24% corridor. Management choosing growth investment over margin expansion - focusing on innovations, adjacencies, and crucial brands.

Strategic Initiatives Progress

Haisha (paints): Growing sequentially, expanded to Eastern geographies from initial 5 Southern markets, but business model not fully perfected and market share below targets. CollTech electronics adhesives: Specifications done, commercial orders started with couple of customers, but not material for 3-5 years. Jowat hot melts: Clear traction in joinery and advanced packaging. NeoPro by Roff: Premium tile adhesive from Grupo Puma tech launched September 2025. UnoFin: Behind expectations; merged sales team with large user group for better GTM.

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